“Medical collections debt often arises from unforeseen medical circumstances. These changes are another step we’re taking together to help people across the United States focus on their financial and personal well-being,” the companies said in a joint statement.
Medical debt can be volatile and unpredictable, and can negatively affect many financially secure consumers. Black, Hispanic, young and low-income consumers are most likely to be impacted by medical debt, the bureau said.
“We expect them to take seriously their role as major actors in the credit reporting system — a system whose integrity and accuracy can determine the financial futures of hundreds of millions of people,” Chopra said.
Starting July 1, paid medical collection debt will no longer be included on consumer credit reports. Millions of Americans had credit scores previously lowered because debts paid after being sent to collections could appear on credit reports for up to seven years.
More changes are expected. It will now take one month before unpaid medical collection debt appears on a consumer’s report, instead of six months, the previous standard.
The three companies also said that starting in the first half of 2023, medical collection debt less than $500 will no longer be included on credit reports.