HOUSTON — Starting Friday, the top three credit reporting agencies are changing the way they handle medical debt.
Equifax, TransUnion and Experian said they will drop paid medical debt on reports starting on July 1, 2022. Until now, it has stuck around for up to 7 years.
Kristin Myers is editor-in-chief of personal finance website The Balance. She said people of color and low-income Americans tend to be most affected by this debt.
“It made you look like a less worthy borrower,” Myers said. “It made them less likely to give you a loan. It made lenders less likely to give you money, or if they did, they would hit you with an even higher interest rate.”
Americans have as much as $140 billion in medical debt. These changes could wipe out 70% of it. If you acquire new medical debt after July 1, it won’t show up on your report for a year. The old timeline was six months.
“This gives people an opportunity to really breathe again and to be able to move forward with their financial future without this medical debt almost being an anchor tied around them,” Myers said.
After the July 1 changes, it's recommended that you get copies of your credit reports. You can get them free at www.annualcreditreport.com.
If your paid medical debt is still on there, you’ll need to contact each agency separately and file a dispute. They have 30 days to investigate.
Another change is coming at the beginning of 2023. Credit reports will no longer include any medical debt if it’s less than $500.