Medical debt is the most prevalent category of debt listed on consumer credit reports, according to the Consumer Financial Protection Bureau. In fact, as of June 2021, credit reports contained information about an estimated $88 billion in medical debt. It can be challenging to navigate the complicated world of medical billing and collection procedures.
Many customers struggle to comprehend the services they are paying for or the meaning of the billing codes on a hospital or medical bill.
As a result, customers frequently have outstanding invoices because they are unsure of what they owe to their healthcare provider or are disputing it. Unpaid debts reported to credit bureaus prior to July 1, 2022, had a negative effect on a person’s credit report.
Fortunately for consumers, there has been a change in the way medical debt is listed on credit reports.
Medical debt that has been settled after being sent to collections is no longer listed on credit reports by the three major credit bureaus (Equifax, Experian, and TransUnion).
Nearly 70% of settled medical debts will no longer appear on consumer credit reports as a result of this shift, according to the credit bureaus.
Additionally, the credit reporting agencies have extended the period of time from six months to one year before medical debt in collections appears on credit reports. Consumers will have more time to settle any disputed charges or arrange a payment schedule with their healthcare provider.
Finally, starting in 2023, the credit bureaus will stop reporting medical debt as a collection item on credit reports if the amount owed is less than $500.
As they navigate the difficult world of medical billing, these adjustments will help many customers’ credit reports.