The Credit Reporting Change That’s Good News for Anyone With Medical Debt
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The three major credit reporting agencies are going to be a bit more lenient with medical debt beginning this fall, and that could mean relief for the millions of American working to pay it off.
According to NPR, Experian, Equifax and TransUnion have all agreed to wait 180 days before reflecting unpaid medical debt in credit score calculations.
The change takes effect Sept. 15.
Before now, there was no uniform way to determine when unpaid medical debt would mean a hit to your credit.
“Rather than attempting to collect past-due medical bills themselves, hospitals and doctors' offices typically engage collection agencies to chase down payments,” NPR reported. “But the timing on when providers take that step varies widely.”
That meant some debt could be transferred to a collection agency as soon as 30 days after billing, when patients may still be working through disputes with their insurance companies.
This new grace period is meant to give people more time to pay bills themselves or make sure that bills that should be covered by insurance don’t negatively impact their credit scores.
This means an unexpected doctor’s visit won’t suddenly derail your efforts to raise your credit score as you prepare to buy a new house or car.
Other Reporting Changes That Could Mean a Higher Credit Score
This isn’t the only recent change credit reporting agencies have made that could boost your credit score.
Experian, Equifax and TransUnion also agreed to remove tax liens and civil judgements unless specific identifying information is available.
That change went into effect July 1. While most people will only see a modest boost, others could watch their credit scores jump more than 40 points when the reporting agencies remove their liens and judgements.
If any of these changes impact you, it might be time to start tracking your credit score (for free, of course) to help you along the road to better credit.
Desiree Stennett (@desi_stennett) is a staff writer at The Penny Hoarder.