Medical Collections and Credit Reports

These changes, which have been in the works for several months, will remove nearly 70% of medical debt in collections accounts from credit reports.

Beginning in July, the three major credit repositories will remove medical debt that was paid after it was sent to collections. These debts can stick around on a consumer’s credit report for up to seven years, even AFTER they are paid off – resulting in lowering consumers’ credit scores and hindering their ability to get affordable mortgages, car loans and other credit. New unpaid medical debts won’t get added to credit reports for a full year after being sent to collections. The firms are also planning to remove unpaid medical debts of less than $500 in the first half of next year.

The CFPB has said medical debt is less predictive of a person’s ability to repay other kinds of loans and made ensuring NCRA’s accurately report medical debt as a priority under their new Director, Rohit Chopra.