Major Credit Bureaus Remove Medical Debt Collections Under $500
Equifax, Experian, and TransUnion have announced they wiped medical debt collections under $500 from US credit reports to help consumers during economic uncertainty.
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By - Three major credit bureaus are giving consumers a break when it comes to medical debt. Equifax, Experian, and TransUnion jointly announced yesterday that any medical debt collection with an initial reported balance of under $500 has been removed from US consumer credit reports.
The credit bureaus wiped nearly 70 percent of the total medical debt collection tradelines reported to the Nationwide Credit Reporting Agencies (NCRAs) in light of the change, according to the joint announcement.
“Our industry plays an important role in the financial lives of consumers. We understand that medical debt is generally not taken on voluntarily and we are committed to continuously evolving credit reporting to support greater and responsible access to credit and mainstream financial services,” said Mark W. Begor, CEO Equifax; Brian Cassin, CEO Experian; and Chris Cartwright, CEO TransUnion.
“We believe that the removal of medical collection debt with an initial reported balance of under $500 from [US] consumer credit reports will have a positive impact on people’s personal and financial well-being,” the CEOs said.
Past-due medical debt impacts over one in seven adults, according to an Urban Institute report released last month. Additionally, nearly two-thirds of adults affected by past-due medical debt have incomes below 250 percent of the federal poverty line.
Regardless of insurance coverage, most adults under the age of 65 have experienced medical debt, reports Kaiser Family Foundation. This debt can lead to serious health consequences, including denied services and forgone care, as well as financial challenges, such as depletion of savings, going without household essentials, and damage to credit scores.
A study published in the American Journal of Public Health in 2019 found the majority of bankruptcy filers said medical expenses contributed to their seeking relief. Since then, consumers have had to manage the health and financial repercussions of the COVID-19 pandemic, as well as recent inflation and economic uncertainty.
Last year, the NCRAs committed to supporting consumers with medical debt collection reporting changes. The group said the changes would “help people to focus on their personal wellbeing and recovery.”
Equifax, Experian, and TransUnion have already eliminated all medical debt collection that had been paid by the consumer from US consumer credit reports. The time period before unpaid medical debt collection appears on a consumer’s credit report also increased from six months to one year in an effort to give consumers more time to address the debt before it was reported on their credit file. These changes went into effect in July 2022.
