How the credit report is changing for medical debts. Beginning July 1, debts paid for medical collections will no longer be included in the consumer credit reports of the three credit bureaus. As part of the recently announced measures, Equifax, Experian and TransUnion will also extend the grace period granted to consumers to pay or organize a plan to cover medical debt. Instead of 180 days, the deadline will be extended to one year.
Also starting in July, credit bureau states will remove all paid medical debts from credit reports. Review your reports after that limit to make sure your paid medical debt no longer appears. Most healthcare providers don't report to the three credit bureaus nationwide (Equifax, Experian, and TransUnion), which means that most medical debts are not usually included in credit reports and generally don't take credit ratings into account. The recent announcement by credit bureaus is a big sign for consumers who have paid off their medical debts, but who still suffer negative credit ratings.
Equifax, Experian and TransUnion are eliminating billions of dollars in medical debt from credit reports. Some 23 million people, or nearly 1 in 10 adults, have significant medical debt, according to a recent report by the Kaiser Family Foundation. And the length of time before unpaid medical collection debt appears on your credit reports increases from 6 months to 1 year. If your medical bill is collected in error and is less than 180 days old or if you have already paid it by insurance, you should be able to do so.
Some medical providers offer interest-free or interest-free financing options through a medical credit card such as CareCredit. And while negative feedback on credit scoring can have long-term financial consequences, medical debt creates a situation where immediate sacrifice is also needed. From now on, paid and unpaid debts for medical collections generally remain on your credit history for seven years after being reported. However, the Consumer Data Industry Association, which represents credit rating companies, called the consumer reports story completely false and misleading.
If you have a large medical debt and don't pay, the health care provider or debt collector could file a lawsuit to collect the debt, which could lead to a wage garnishment. Thanks to the Covid-19 pandemic, you are entitled to a free credit report a week from each of the three major credit reporting companies until the end of the year. Unpaid medical debts are usually released to a collection agency after 60 to 120 days of delinquency. The burden worsened during the COVID-19 pandemic, as unemployment numbers increased and the virus placed additional pressure on healthcare and consumer costs.
Unpaid medical bills can be sent to debt collectors, at which point they may appear on your credit reports and affect your rating. If your medical bill is being collected in error and is affecting your credit score, you are probably wondering if it can be eliminated.