The three national credit reporting agencies on Friday announced an industry measure to remove nearly 70 percent of collected medical debt accounts from consumer credit reports.
Equifax, Experian and TransUnion said that as of July that they will no longer include such debt on consumer credit reports.
The agencies also said they will extend the time for unpaid medical collection debt from six months to one year, giving consumers more time to work with providers before credit is affected.
The joint announcement comes as the COVID-19 pandemic has led to millions of hospitalizations across the country. The agencies acknowledge that “two-thirds of medical debts are the result of a one-time or short-term medical expense arising from an acute medical need.”
More than 40 million Americans had an estimated $88 billion in medical debt as of last June, according to a report from the Consumer Financial Protection Bureau.
"Medical collections debt often arises from unforeseen medical circumstances. These changes are another step we're taking together to help people across the United States focus on their financial and personal well-being," the credit agencies said in a statement.
Lenders use credit reports to determine whether to issue loans. The reports can also affect a consumer’s ability to rent an apartment or find employment.
