Up to 70% of medical debt will be removed from Americans' credit reports starting July 2022
As of July 1, 2022, about 70% of medical debts will no longer be included in Americans' credit reports, providing relief to millions.
It’s no secret that Americans are frequently strapped with crushing medical debts, but as of July, millions of consumers will see some or all that damaging information wiped from their credit reports.
The three major credit reporting agencies — Experian, Equifax, and TransUnion — announced in March that an estimated 70% of medical debt will no longer impact credit reporting.
Consumers can thank a report from the Consumer Financial Protection Bureau (CFPB) that found about $88 billion in medical bills tarnishing credit reports everywhere. Roughly 58% of bills in collections appearing on credit reports are related to medical billing, the report also found.
“When it comes to medical bills, Americans are often caught in a doom loop between their medical provider and insurance company,” CFPB Director Rohit Chopra said in a March statement. “Our credit reporting system is too often used as a tool to coerce and extort patients into paying medical bills they may not even owe.”
The report highlights how medical bills are often incurred due to unexpected emergencies and are subject to the whims of vague pricing. What’s more, consumers are unjustly burdened by insurance woes and arbitrary pricing rules.
In other words: Consumers get saddled with outrageous medical bills when they’re at their most desperate, especially those who live with disabilities or chronic illness. These monumental costs then go to collections, where they damage credit reports and potentially limit consumers’ opportunities.
According to the CFPB report, Black, Latinx, veteran, low-income, elderly and young adult consumers are disproportionately affected by adverse medical bills showing up on their credit reports. Research from the American Enterprise Institute shows that unpaid medical bills do not correlate with a consumer’s ability to manage their payments.
The long-overdue decision by the major credit reporting agencies is a positive step forward for an estimated 23 million Americans struggling with medical debt. But given those agencies’ poor track record when it comes to correcting reporting errors, many of those consumers will likely be forced to join hundreds of thousands of others waiting in line waiting for their reports to be corrected.
That being said, it’s essential for consumers to know what’s currently on their credit report, as well as how to quickly and efficiently correct information reflecting most medical debt.
What are credit reporting errors?
Credit reporting errors are incredibly common mistakes made by credit reporting agencies on your credit report. They can compromise your credit score, ability to get a loan and rent or buy housing.
Between January to April 30 of 2021, 248,305 consumer reporting disputes were filed, most of them against credit reporting data, according to the CFPB. That’s an astounding 62% more consumer reporting complaints in the first six months of 2022 than the entirety of 2019.
Common errors in credit reports include:
- Identity errors. These are mistakes in your personal information, such as the misspelling of your name, confusing your information with someone else’s, or errors to your address or phone number. Sometimes due to incorrect information furnished by the SSA, you might even be listed as dead on your credit report.
- Account errors. An account where you’ve made payments on time might be listed as late or unpaid. The account could also reflect the wrong status, like when an account says it’s open when it is actually closed.
- Duplication errors. The same debt can appear more than once on your credit report by mistake.
Going into July, medical debt appearing or failing to be cleared on your report will be considered an error that you must file a dispute to correct.
How can I file a dispute to have my medical debt removed from my credit report?
You’re entitled under the Fair Credit Reporting Act to have any incorrect information on your credit report corrected, including most medical debts as of July 2022. Credit agencies must remove the damaging medical debt from your background report within 30 days of your claim being filed.
Here’s what the dispute process looks like:
- A consumer calls the credit reporting agencies and submits a written dispute letter outlining the mistake in the report via certified mail. It’s helpful to include information or documentation that supports the claim. Consumers have to call each agency separately and file the disputes.
- The agencies have 30 days to investigate your claim and correct any mistakes.
- Once the information is correct, consumers are entitled to ask for a revised report for themselves and anyone who received a previous report within the last two years.
- Consumers can also request a free copy of their report within 60 days.
Given the volume of complaints agencies are receiving since 2020, the frustration and bureaucracy of the dispute process is now more frustrating than ever. You may even be entitled to damages if you suffer adverse consequences because of misreporting or failure to correct a report.
That’s where Consumer Attorneys comes in — we can expedite the dispute process by suing consumer reporting agencies and potentially win you damages in court.
Let us know if we can help, we offer a free consultation to evaluate your case.