Three major credit-reporting firms, Equifax, Experian, and TransUnion, announced on Tuesday that they will no longer include medical debt with an initial reported balance of under $500 in U.S. consumer credit reports. This means that nearly 70% of total medical collection debt tradelines reported to the major credit-reporting agencies have been removed from consumer credit files in the U.S.
The three companies made the decision as part of their continuous efforts to evolve credit reporting to support greater and responsible access to credit and mainstream financial services. In a joint statement, the chief executives of the companies acknowledged that medical debt is generally not taken on voluntarily and that they understand the impact it can have on consumers.
What is Medical Debt?
Medical debt is the amount of money owed to healthcare providers, hospitals, clinics, or other medical facilities for services or treatments received. It can occur when someone receives medical care that is not fully covered by their health insurance or when they have no insurance at all.
Medical debt is a common problem in the United States, with millions of people struggling to pay off their medical bills. It can have a significant impact on a person’s financial well-being, as it can lead to bankruptcy, damaged credit scores and limited access to credit and financial services. Medical debt can also accumulate due to high deductibles, copays, or out-of-pocket expenses.
The cost of healthcare in the U.S. is famously high, and even people with health insurance can face high medical bills that they may not be able to afford. In some cases, people may be forced to choose between paying for their medical bills or paying for other essential expenses like rent or food.
Efforts are being made to address the issue of medical debt, including initiatives to provide financial assistance to those who are struggling to pay their medical bills. However, the problem remains a significant challenge for many Americans, and critics are calling for comprehensive healthcare reform to ensure that everyone has access to affordable healthcare.
What Does This Mean For Americans?
This decision is expected to benefit millions of Americans struggling with medical debt, which can be a major barrier to accessing credit and financial services. Medical debt can result from unexpected illnesses or accidents, and can often be overwhelming and difficult to pay off.
By removing medical debt with a balance of less than $500 from credit reports, the credit-reporting firms are helping to level the playing field for consumers and provide them with greater opportunities to access credit and other financial services.
Individuals who have had medical bills below $500 will no longer be negatively impacted by their previous medical debt when applying for credit, personal or instalment loans. This will provide them with greater opportunities to access credit and other financial services, helping them to improve their financial well-being. This change is expected to raise the credit scores of huge numbers of Americans.
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