The three main credit bureaus in the United States have announced new medical debt reporting measures that are expected to remove nearly 70% of medical collections from consumer credit reports. File Photo by Rhona Wise/EPA-EFE
March 19 (UPI) -- The three main credit bureaus in the United States have announced new medical debt reporting measures that are expected to remove nearly 70% of medical collections from consumer credit reports.
Equifax, Experian and TransUnion said in a joint statement Friday that medical debt that was sent to collections but paid off will be removed from credit reports rather than being kept on them for up to seven years.
The credit bureaus also said they would increase the time consumers have to pay unpaid medical bills before they are sent to collections and included on credit reports from six months to a full year.
Those changes are expected to become effective on July 1, according to the credit bureaus.
Additionally, starting in the first half of next year, the company will no longer include medical debt under $500 on credit reports.
The move was praised by President Joe Biden in a statement made to Twitter, crediting the move to a report last month from the Consumer Financial Protection Bureau.
"This is a step in the right direction, thanks to @CFPB," Biden said. "We'll keep fighting for consumers - from increasing transparency to preventing surprise billing and more."
The CFPB report said that medical debt is the most common collection tradeline reported on credit reports but that medical debt collections were "less predictive than non-medical collections of future credit performance."
"Medical debt can also lead people to avoid medical care, develop physical and mental health problems, and face adverse financial consequences like lawsuits, wage and bank account garnishment, home liens, and bankruptcy," the CFPB report reads.
"Given the widespread impact of COVID-19, addressing medical debt is an urgent priority."