Medical debts are disappearing f🌠rom Americans’ credit reports, but they’re not extinct yet—and a government regulator wants to change that. 

The percentage of people with unpaid medical collections on their credit reports fell to 5% in June 2023 from 14% in 2022 after the three major credit reporting bureaus said they would stop including unpaid medical debts under $500 on credit reports, the Consumer Financial Protection Bureau (CFPB) said. Still, 15 million people had such debts on their reports—mainly ones over the $500 threshold—as the bureau continues to evaluate ways to restrict medical debts from appear💮ing on credit reports.

“Experian, Equifax, and TransUnion took steps to remove many medical bills in part because of the recognition that they hold little predictive value,” CFPB Director Rohit Chopra said in a press release. “Findings from our latest research reveal the impact of these changes and the need for further reforms.”

Poor Indicator of Borrowers' Repayment

The fundamental problem with 澳洲幸运5官方开奖结果体彩网:medical debts, according to the CFPB, is that their appearance on credit reports hurts borrowers while failing to do what credit reports are supposed to do—help lenders assess how likely any given borrower is to pay back what they owe.

According to bureau research, medical debt is likely to go to 澳洲幸运5官方开奖结果体彩网:collections, tarnishing patients’ credit, not because of unwillingness to repay but because of the confusing web of medical billing and health insurance reimbursement that often makes people uncertain exactly how much they owe, and to whom. 

Those debts can make life harder in any situation where someone runs a credit check on you—including taking out a loan, 澳洲幸运5官方开奖结果体彩网:renting an apartment, or𝓡 even applying for a job, even though credit reports on medical debt are “plagued with inaccuracies and mistakes,” according to the bureau. 

Many with Medical Debt in the South

In 2023, the CFPB said it had begun a rulemaking process to ban medical debt from appearing on people’s credit reports. The agency has taken several steps against medical debt collectors in recent years including launching a probe of medical debt and collection practices in 2023, and going after collectors accused of violating the 澳洲幸运5官方开奖结果体彩网:No Surprises Act, a 2022 law that bans surprise medical billing.

Of the 15 million people with medical collections on their reports, many lived in low-income communities in the southern part of the U.S. They were likelier to have higher balances and less likely to be affected by the change in credit reporting, the bureau's researchers found. The average medical balance on credit reports went up to more than $3,100 from $2,000 because of the removal of smaller balances.