DENVER (KDVR) — Some 20% of U.S. households carry some type of medical debt, according to the Consumer Finance Protection Bureau. Medical debt is a leading cause of bankruptcy.
This year, millions of Americans will find relief from the impact on their credit rating. As part of the government’s effort to reduce the impact of medical expenses, any paid and cleared debt under $500 will be removed from Equifax, Experian and Transunion credit reporting agencies.
The changes are expected to erase nearly 70% of medically related debt on record.
“You could see an increase in your credit scores, which allows an opportunity to borrow at lower rates,” attorney Leslie Tayne told FOX31.
Longer reporting time for medical debt over $500
Tayne pointed out that those with medical bills will not need to contact the credit bureau.
“You don’t have to sign up for it. It’s not a program, it’s going to be an automatic erasing of the medical debt that is reported up to $500,” Tayne said.
It is important for everyone to closely monitor credit reports. Check for mistakes and dispute any errors.
Those struggling with debt should contact healthcare providers to work out a payment arrangement. It is not uncommon for medical debt to be interest-free.
Tayne added that medical debt greater than $500 will be reported to credit bureaus. But it will take a year, rather than six months, giving you more time to work with creditors.