NASHVILLE, Tenn. (WTVF) — Medical bills have become a source of major financial trouble for millions of Americans. It's the largest source of personal debt in the U.S.
Now, the top three credit reporting agencies plan to drop most medical debt from consumers' credit reports starting this summer.
Equifax, Experian and TransUnion earlier this week said they are making a number of changes to the way they handle medical debt on credit reports, which is a record of a consumer's borrowing and repayment.
Lenders use credit reports to determine whether a consumer is a good bet for a loan, which means a poor credit score can make it hard to get a mortgage, car loan or other products.
Credit reports can also affect people's ability to rent an apartment and even get a job.
The announcement comes as federal regulators and consumer advocates are increasingly scrutinizing the issue of medical debt. Errors related to medical debt are common on credit reports, and consumers often have difficulty clearing up the problems, the Consumer Financial Protection Bureau said.
Roughly 1 in 5 U.S. households carry debt related to health care, according to the CFPB.
The three top credit reporting agencies said they are making several changes in how they handle medical debt. They include:
- Paid medical debt will be dropped from consumers' credit reports.
- The time period before unpaid medical debts in collections will appear on a credit report will increase from 6 months to 1 year.
- The credit bureaus will drop medical collection debt under $500 from credit reports.
