Medical debt can be some of the most devastating debts you carry. It can come out of nowhere after traumatic illnesses or accidents and eat into whatever savings you currently have. But there is some hope on the horizon. A recent medical debt forgiveness regulation was passed and went into effect on July 1st. So what does this mean for credit repair, and what is in store for the future?
Credit Reporting and Medical Debt
Medical debt is rarely a choice. Millions of Americans are affected by unexpected injuries, debilitating health conditions, and ongoing treatment. Medical treatment costs are enormous, and insurance is often complex and imperfect. Once the changes go into effect, much of this debt will be erased from your credit report. The credit bureaus will stop reporting medical debt that went into collections once it’s paid off. Currently, this debt can stay on your report for seven years, negatively affecting your financial health for a long time. It will also be a year before medical debt hits credit reports rather than the current six months.
Medical Debt under $500
There is another significant change coming in 2023. In the year’s first half, the bureaus will stop reporting any medical debt less than $500. Even a small medical debt of $100 can negatively affect your credit and ability to get a loan once that debt is reported.
These changes come after a scathing report about medical debt in America. This big business for collectors and financers is draining people’s ability to maintain good financial health. And on top of a medical crisis, additional stress can make things worse. The report showed that there was currently $88 billion in medical debt on consumer credit records. And that number didn’t account for outstanding debt not yet reported or in collections. Surprisingly, most medical debt reported was for amounts under $500, though many had several outstanding balances.
Credit Repair for Medical Debt
It’s essential to know your rights. I don’t ever want someone to be in a bad financial position when there are solutions to help dig you out. Credit repair isn’t shameful; it can be the best tool available to get you back to good standing with credit bureaus. Whether you have outstanding medical debt or other financial concerns, getting started with Best Credit RX can help you regain your confidence and get back to a health baseline.