The three consumer credit bureaus (Experian, Exquifax, and TransUnion) have announced two important changes to the way medical debt in collection will be reflected on credit reports:
- Any paid-off debt ($0 balance) will no longer be reported to bureaus.
- Debt with higher than $0 balance will not be reported until 12 months have elapsed.
What this means to you is that:
- Once you have paid off a medical collection, it will disappear from your credit report entirely and will no longer hurt your credit score. Previously, this could remain on a person’s credit report for up to 7 years even after being paid off, hurting their score.
- You now have more time to address any medical collection debt you do have (this was previously reported to bureaus after only 6 months, rather than 12).
This is great news for consumers who have accrued troublesome debt due to unplanned medical expenses – which may be almost half of all Americans, according to one recent survey.
However, it should be noted that you should still plan on paying off medical collection debt as much as possible before one year has elapsed, or else that debt will hurt your credit score until you pay the balance down to zero.