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Medical Bill.jpg

Millions of consumers have been surprised to pull up their credit report and find a collection from a doctor showing up on their credit report. In a historic change, many of these past due bills will no longer show up on a credit report.

Back in 2015, the three major credit bureaus, Equifax, Experian and TransUnion, mandated to collection companies that they had to wait at least six months before they could report a medical bill to a collection company. That is the federal guideline, but medical collection companies were pushing collections on consumer credit report within a few months after a service had been rendered.

Today, there are $88 billion in unpaid medical collections showing up on 43 million American consumer credit reports – roughly 22% of all credit reports. The impact to a credit score from one collection is dramatic, no matter the size. A consumer can expect a drop of upwards of 100 points to their credit scores from the first collection.

Under an inquiry from the Consumer Financial Protection Bureau, the three major credit bureaus have elected to remove 70% of all medical collections. The process to remove these medical collections will start in July of this year, 2022. Some will not be removed until the first part of next year.

This is an outline of the collections that will be removed.

  1. Any medical collections that have been paid will be removed.  
  2. New unpaid medical collections cannot be sent to a consumer’s credit report until one year removed from the time of service.
  3. Any medical debts under $500.

What is the downside of this change? Medical service providers will have one less means to collect a debt from a consumer. It is a common understanding that around 30-40% of all patients do not pay their medical debts outside of insurance coverage. This number varies from state to state. But it is a substantial number.

For this reason, doctors, hospitals and other medical specialist will probably demand payment before services are rendered. It may mean a delay of services provided or even a possibility of having services denied. There is always an unintended consequence. Medical services will be tougher to attain in some situations.

Just a heads up when you go to the doctor or hospital in the future.

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