Medical debt may no longer hurt your credit score

If you have medical debt dragging down your credit score, there’s relief on the way. The three largest credit bureaus - TransUnion, Equifax and Experian - are removing cleared medical debts from consumers credit reports beginning in July. This means if you’ve paid your medical bills off but the debt is still sitting on your credit report, this negative mark will be removed.

This will be a relief for millions of Americans that are burdened with medical debt. According to a recent report by the Consumer Financial Protection Bureau, there is an estimated $88 billion owed in medical debt.

These debts have significant long-term financial consequences on consumers because they are left with fewer options for housing, loans and credit cards.

So if you’re someone who’s had medical debt in recent years, or are currently dealing with it, there’s change on the way that can potentially benefit your credit score.

Here are the details of the new changes effective July 1:

• Medical debt that was in collection but has been paid will no longer be included on consumer credit reports.

• Unpaid medical debt in collections will be reported on credit reports after one year, longer than the current six months.

• Starting in the first half of 2023, Equifax, Experian and TransUnion will no longer include medical debt in collections under $500 on credit reports.

If you recently tried to buy a home but were unable to because of medical debt, now is a great time to re-apply to see how much you could qualify for!