Medical debt is one of the leading causes of financial strain for individuals and families in the United States. According to a 2019 study by the Kaiser Family Foundation, one in four Americans struggles to pay their medical bills. This is why many people are resorting to credit cards or personal loans to cover these costs. Unfortunately, medical debt can also negatively impact your credit score, making it more difficult to access credit in the future. However, there is some good news! As of September 15, 2017, medical debt under $500 is now being removed from credit reports.
Why this change occurred?
This change came about as a result of a collaboration between credit reporting agencies and state attorneys general. Under the agreement, credit reporting agencies Equifax, Experian, and TransUnion agreed to remove medical debt under $500 from credit reports within 180 days of the debt being paid or settled. The move was intended to help consumers with small medical debts, who may have been unfairly penalized with lower credit scores due to their inability to pay.
The removal of medical debt under $500 from credit reports is a significant change that could benefit millions of Americans. Medical debt is unique in that it often arises unexpectedly and can be difficult to manage. Especially for those who are already struggling financially. Even relatively small debts can have a significant impact on a person’s credit score. This can make it more difficult to obtain credit cards, loans, and other financial products in the future.
The removal of medical debt under $500 from credit reports is a step towards greater fairness in credit reporting. In the past, medical debt has been treated differently from other types of debt. Therefore consumers have often been penalized for circumstances beyond their control. By removing small medical debts from credit reports, credit reporting agencies are acknowledging the unique challenges that consumers face when dealing with medical debt.
Check your credit reports
It’s important to note, however, that not all medical debts under $500 will be automatically removed from credit reports. Consumers should check their credit reports to ensure that small medical debts they have paid or settled have been removed. If you have any errors on your credit report, you should dispute them with the credit reporting agency and the creditor to have them corrected.
In conclusion, the removal of medical debt under $500 from credit reports is a positive step forward for consumers. This change should help to reduce the financial burden faced by those struggling with medical debt and improve their credit scores. If you have medical debt under $500, be sure to check your credit report regularly and take action to have any errors corrected.