Millions of Americans worry over their credit scores. Your credit score is based on a number of factors. Lenders and banks pay close attention to your credit score whenever you apply for a credit card, mortgage, car loan or just about any other form of credit. A perfect score is 850.
Now appearing on 15 million Americans credit report is $49 billion in medical debt. But that’s set to change. Soon, medical debt will no longer appear on a credit report. That’s thanks to a new Consumer Financial Protection Bureau rule announced Tuesday by the Biden administration.
The new rule is the continuation of a trend that began last year. The three national credit reporting agencies — Experian, Equifax and TransUnion — said in 2024 that they were removing medical collections under $500 from U.S. consumer credit reports. Most folks, though, aren’t struggling with a $350 medical bill — they’re struggling with bills that are in the thousands. The government agency’s new rule is much more realistic in banning all outstanding medical bills from appearing on credit reports and prohibiting lenders from using that information.
The new rule will make a big difference for many. The Consumer Financial Protection Bureau says its action will give millions of consumers increased access to loans and lead to the approval of approximately 22,000 additional mortgages a year. Americans with outstanding medical bills may see their credit scores rise by an average of 20 points, according to the bureau.
If you’re not already keeping an eye on it, you can and should check your credit report free once a year. You don’t have to pay those who advertise on television or online for knowing your credit score. You can check free of charge once a year by going to AnnualCreditReport.com.
Too many Americans don’t pay attention to their credit scores. Should a mistake appear on your report, and it is known to happen, you can file a request for review.
High medical bills should always be scrutinized, too. Always ask for an itemized bill. Medical billing is notoriously complicated and rife with errors. An itemized bill includes the billing codes of all care received. If something is off between these codes and the care provided, contesting your bill can yield changes.
Countless Americans have had to file bankruptcy for delinquent medical bills. A change with the credit reporting agencies does not change anyone’s obligation to make valid medical payments. What this news does mean is you may have a better chance of getting a loan or a mortgage. The financial obligation still remains.
As always, credit should be used wisely. You really only need one or two credit cards and receiving tempting offers from those who offer low-cost interest payments for a short time could lower your credit score or lead to an increase in debt. High medical bills or not, it’s too easy these days to quickly become overwhelmed by debt.