Americans are getting a break from one of the largest sources of personal debt.
Credit reporting agencies Equifax, Experian and TransUnion announced significant changes in reporting medical collection debt that will remove almost 70% of medical debt from consumer credit reports.
Beginning July 1, paid medical debt will not be included on credit reports. And consumers will be given an extended grace period — from six months to one year — before the debt appears on a person’s account.
The companies also no longer will include debts of less than $500 on credit reports beginning in 2023.
Two-thirds of medical debt comes from a one-time or short-term medical need, according to the Kaiser Family Foundation.
The changes come after a detailed review of the amount of medical debt on credit reports. The companies say the moves will help people focus on recovery following the pandemic.
“Medical collections debt often arises from unforeseen medical circumstances. These changes are another step we’re taking together to help people across the United States focus on their financial and personal wellbeing,” Equifax CEO Mark Begor, Experian CEO Brian Cassin and TransUnion CEO Chris Cartwright said in a statement.