By JoAnn Merrigan, WSAV —
Up to 19% of people in Georgia have a medical bill that’s in collections.
“And it’s even higher among people of color, up to 21%,” says Liz Coyle from Georgia Watch.
“Sometimes those debts remain on consumers’ credit reports for years even if they’ve been paid off.”
Starting in July, the three major credit reporting agencies, Experian, Equifax and Transunion will make changes that experts say can erase up to 70% of medical debt collections starting with taking off debt you have paid and not just letting it sit on your credit report. And any new debt sent to collections can’t be seen on your credit report for one year. (It’s currently six months).
Mitch Kramer, a financial expert, says in 2023, the credit agencies will also no longer include medical collection debt under at least $500 on credit reports.
“Up to 48 million Americans could be impacted by that,” says Kramer.
Kramer says according to the Consumer Financial Protection Bureau, 62% of medical debts sent to collections are under $500.
“One of the sad things that collection agencies or medical service providers have done is something called ‘debt parking’ and debt parking is instead of trying to collect the debt they just notch a person’s credit report and anytime they try to apply for credit it pops up and they have to deal with it,” says Kramer.
“And if you look at the lending institutions, the banks that would do loans for houses or cars, they don’t really care that much about medical collections, but it does hurt your FICO score,” said Kramer. “That could mean it may be harder for you to get a job or a loan for a car or home because your FICO score has been dinged.”
Kramer says for many consumers navigating the medical billing system is challenging.
“You go in for a procedure and you get a doctor bill, then you’ve got a facility bill, you’ve got a hospital bill, you’ve got an anesthesiologist bill.”
Coyle says The Consumer Financial Protection Bureau has been signaling that it may work to prevent medical debt from ever being used to damage a credit report.
Coyle says in March, the CGPB issued a new report that found that medical debt is not ‘predictive’ of how consumers handle other kinds of debt.
She says people for the most part voluntarily take on other kinds of debt such as a car loan or mortgage. But Coyle says a person who needs medical care doesn’t necessarily have the choice of seeking care and taking on the medical debt as a result.
“It’s absolutely appropriate that the bureaus are finally taking steps to not ruin people’s credit scores,” said Coyle.
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