Medical Debt No Longer Impacts Credit Scores, But Still Requires Attention
WASHINGTON D.C. – In a notable shift for millions of Americans, medical debt will no longer factor into credit scores calculated by Equifax, Experian, and transunion, the three major credit bureaus. the change, implemented in July 2022, removes a long-standing barrier to financial stability for many, but experts caution that managing medical bills remains crucial.
For years, unpaid medical bills - even those in collections – could considerably lower credit scores, hindering access to loans, mortgages, and even rental housing. The new policy eliminates this impact,potentially boosting the creditworthiness of an estimated 43 million Americans who collectively hold $88 billion in medical debt,according to a recent report by the Consumer Financial Protection Bureau. Though, this doesn’t erase the debt itself, nor does it negate the potential for collection agencies to pursue payment.
The move comes after increasing pressure from consumer advocates and a growing recognition of the unique circumstances surrounding medical debt.Unlike other forms of debt, medical bills often arise unexpectedly due to illness or injury, and patients frequently lack control over the cost of care. “Health care providers are often willing to work with you if it means they’ll receive at least partial payment rather than nothing at all,” said Experian.
Despite the positive change,individuals still have several options to address outstanding medical debt and avoid potential financial hardship. Thes include:
* Negotiating: Healthcare providers are frequently enough open to negotiating lower payment amounts.
* Payment Plans: Many providers offer installment plans, potentially without interest.
* Financial Assistance: Hospitals frequently have income-dependent financial assistance programs, and retroactive assistance may even be available for bills incurred over a year ago, according to Lindsey Zischkale, a policy analyst at Undue Medical Debt, as reported by Bankrate.
* Nonprofit Assistance: Various nonprofit organizations can also provide support and guidance.
