In May 2022, the three national credit bureaus, Experian, Equifax, and TransUnion, removed unpaid medical debts of less than $500 from American consumers’ reports. According to the government’s Consumer Financial Protection Bureau (CFPB), this move will impact approximately 22.8 million consumers. While more needs to be done, this is a major step in the right direction.
The Impact of Removing These Medical Debts
For those with medical debt of less than $500 on their credit reports, the CFPB estimates that their credit scores should improve by an average of 21 points. A 20-point increase can reduce upfront mortgage fees by 0.25% of the loan’s balance; for a $250,000 mortgage, that’s a $625 reduction due at the signing. Higher credit ratings can help people obtain credit cards and mortgages and receive lower interest rates. A better credit score can even help someone rent an apartment or get a new job.
What’s Left to Be Done
For half of all consumers, eliminating these small debts will eliminate all medical debts from their credit reports. However, it’s important to recognize that not all medical debt will be eliminated. There is increasing pressure from Congress to remove all medical debt from credit reports. For now, larger amounts (more than $500) will be on a credit report if they’ve been unpaid for after a year.
What You Should Do If You Have Had Medical Debt
In theory, the credit bureaus should have already removed the small unpaid medical debts from credit reports. They should also have removed information relating to paid medical debts, regardless of the amount.
But one-in-five Americans have at least one error on a credit report. Therefore, everyone with any history of medical debt should review all three credit reports (i.e., obtain a report from each of the bureaus) to see if their records have been updated. At the same time, they should review it for any other errors, especially any suggestion that they may be the victim of identity theft.
If you discover errors on your credit report, it is worth it to demand the credit bureaus fix the report.
The Credit Report Law Group Can Help
To do that, consider contacting an attorney specializing in helping consumers fix their credit reports. Better than the “credit repair companies,” an attorney who specializes in credit work can help repair your record and work to end debt collection harassment. And they’ll help you receive compensation for the damage you’ve suffered due to reporting mistakes. Call us today.