Small Medical Collections Removed
The 3 major credit bureaus removed the medical collections records under $500 on April 11th, 2023.
This is one of the actions in response to CFPB’s Feb 2022 report on medical debt.
The other actions adopted earlier by 3 bureaus:
- Removed paid medical collection debt beginning from July 1, 2022;
- Increased the time before unpaid debt appears on credit reports from 6 months to 1 year.
🏥 A recap of the Feb 2022 CFPB report:
📍 A total of $88 billion in medical collections,
📍 Roughly every 1 in 5 adults reports medical debt.
📍 58% of collections in credit reports are medical collections.
📍 Most medical debts are low tickets below $500, but 10%~ owns $1,500+.
CFPB challenged whether medical debt should be in credit reports, given that consumers often do not have choices and visibility of the pricing.
Many lenders already exclude medical collections when evaluating a consumer’s credit.
Graph source: CFPB.