The biggest credit-reporting firms will strip tens of billions of dollars in medical debt from consumers’ credit reports, erasing a black mark that makes it harder for millions of Americans to borrow.
Equifax Inc., Experian PLC and TransUnion are making broad changes to how they report medical debt beginning this summer. The 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 companies 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 if they are paid off. 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. That threshold could rise, according to people familiar with the matter.