Credit reporting agencies to change handling of medical debt
(Gray News) - Credit reporting agencies Equifax, Experian and TransUnion announced Friday they are changing how medical collection debts will be reported.
Starting on July 1, paid medical collection debts will no longer be included on credit reports, according to a news release from TransUnion.
The release also stated medical collection debts under $500 would not be reported in the first half of 2023.
In addition, the time period before an unpaid medical collection debt is reported will increase from six months to one year. The release stated that this is to allow consumers to have time to work with insurance and healthcare providers in order to address their debt.
TransUnion said the changes will eliminate nearly 70% of medical collection debt tradelines in consumer credit reports. A tradeline is information about a person’s account that is sent, generally on a regular basis, to a consumer reporting agency, the U.S. Consumer Financial Protection Bureau says.
About two-thirds of medical debts are the result of a one-time or short-term medical expense, the Kaiser Family Foundation reported.
The agencies cited this as well as the COVID-19 pandemic and detailed reviews as reasons for the new measure, stating they allow consumers to “focus on their personal wellbeing and recovery.”
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