“Medical collection debts often arise from unforeseen medical conditions. These changes are another step we are taking together to help people across the United States focus on their financial and personal well-being,” the two companies said in a joint statement.
Medical debt can be volatile, unpredictable, and it can be negative It affects many financially secure consumers. The bureau said black, Hispanic, young and low-income consumers are most likely to be affected by medical debt.
“We expect them to take their role seriously as key players in the credit reporting system – a system whose integrity and accuracy can determine the financial futures of hundreds of millions of people,” Chopra said.
As of July 1, medical collection debt paid will no longer be included in consumer credit reports. Millions of Americans had previously lowered credit scores because debts paid after being sent to collections can appear on credit reports for up to seven years.
More changes are expected. It will now take one year before an unpaid medical collection debt appears on a consumer report, instead of the six months, which was the previous standard.
The three companies also said that from the first half of 2023, medical collection debts of less than $500 will not be included in credit reports.