Is It Enough To Offer Asking Price in Today’s Housing Market?

Big changes are coming to the way medical debt will be handled on credit reporting as a result of a report issued by the Consumer Financial Protection Bureau (CFPB). According to the CFPB’s research 58% of collections on a consumer’s reports are medical. And as of June 2021, the amount of medical debt on consumer credit reports was $88 billion dollars. Per CFPB Director Rohit Chopra, “When it comes to medical bills, Americans are often caught in a doom loop between their medical provider and insurance company. Our Credit reporting system is too often used as a tool to coerce and extort patients into paying medical bills they may not even owe.”

What Will Change?

  1. Starting July 1, 2022, medical debt that has been paid will no longer be included on credit reports from Equifax, Experian and TransUnion. 
  2. In addition, these credit bureaus are increasing the amount of time before medical debt in collections appears on credit reports to 12 months. With this timeframe previously at 6 months, this will undoubtedly give the consumer more time to settle the debt before it is reported to the credit bureaus.
  3. Starting in early 2023, any unpaid medical debt under $500 will not be able to be reported at all.  They estimate that these changes will remove nearly 70% of medical collection debt tradelines from consumer credit reports. That threshold may change as there is much speculation on whether unpaid medical debt of any amount should be reported 

Bottom Line

It has long been debated how much weight a borrower’s medical debt should hold when determining their creditworthiness. One things for sure, these changes have the potentially to help hundreds of thousands of consumers with the CFPB calling the new standards “a clear and important precedent for the health care industry.”