Medical Debt No Longer on Credit Reports

In a big win for consumers, The White House announced that a deal with the credit reporting agencies will eliminate medical debt from credit reports that has been paid off and beginning in 2023, credit agencies will not report medical debt under $500.

Prior to the Biden administration changing how medical debt is reported, debt that was once sent to collection and then paid off could still stay on a credit report – causing higher borrowing costs for those who no longer owe medical debt. This move comes as the ┬áConsumer Financial Protection Bureau (CFPB) released a report showing that 58% of all unpaid debt is medical debt.

While medical debt is a massive problem in and of itself, the larger ramifications of bad credit scores can haunt consumers. Some jobs require a credit check to get hired leading to higher unemployment among those with bad debt. Landlords and mortgage lending institutions also require credit checks and those with past medical debt may miss out on getting a loan or being approved for a rental leading to worse housing outcomes.

The Consumer Financial Protection Bureau is also considering ending the reporting of medical debt on any credit report regardless of whether or not it has been paid off.

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