Starting Sept. 15, the three major credit-reporting agencies — Experian, Equifax and TransUnion — will set an 180-day waiting period before including medical debt on a consumer’s credit report. The six-month period is intended to ensure there’s enough time to resolve disputes with insurers and delays in payment.
In addition, the credit bureaus will remove medical debt from consumers’ credit reports once it’s paid by an insurer. (Some credit-scoring models don’t penalize paid medical debt from any source.)
The changes grew out of two efforts by states to aid consumers: a 2015 settlement negotiated by New York Attorney General Eric Schneiderman and the three credit-reporting agencies, and an agreement shortly afterward between the agencies and 31 state attorneys general. The changes will be instituted nationwide.
The 180-day waiting period is “a big step forward toward a more equitable process,” said Julie Kalkowski, executive director of the Financial Hope Collaborative at Creighton University in Omaha, Neb., which provides financial education and coaching to low-income single mothers.
Forty-three million Americans have medical debt in collections that’s adversely affecting their credit, according to a 2014 report by the federal Consumer Financial Protection Bureau, the bureau’s most recent data.
But there’s a catch: Many banks and other lenders haven’t yet adopted the newer versions of the credit-scoring models. What’s a consumer to do? You can’t control which scoring model a lender uses, but you can check your credit report regularly to make sure it’s accurate.