Medical bills and credit

Is medical debt vanishing from credit reports?

Health care bills are about to become far less threatening to Americans' financial well-being.

The three major credit bureaus are erasing most medical debts from people’s credit reports, and the Biden administration is reducing or eliminating medical debt as a factor in government lending decisions.

Here’s what you need to know about medical debt now.

1 1 in 5 U.S. households has medical debt Roughly 1 in 5 U.S. households have medical debt, according to the Consumer Financial Protection Bureau.

Newer versions of credit scoring formulas treat medical debt less harshly.

The CFPB announced in March that it would investigate whether medical debt should be included on credit reports at all.

The three credit bureaus — Equifax, Experian and TransUnion — are promising to remove nearly 70% of medical debts from consumer credit reports within the next year.

2 Most medical debts disappearing from credit reports Starting July 1, all paid medical collections will be eliminated from people’s credit files, and no unpaid bill will be reported until 12 months have passed, an

increase from the current term of six months. By June 30, 2023, the three bureaus will also stop reporting unpaid medical debts under $500.

Recent moves by the Biden administration could help improve access to credit. In April, Vice President Kamala Harris announced additional reforms, including reducing or eliminating medical debt as a factor in government lending decisions. That should make many home and business loans easier to get.

3 What you can do to deal with medical debt

• Stay covered. Insured people enjoy more consumer protections, and better access to health care, than the uninsured. People who aren’t covered by workplace insurance or government plans can find coverage through Affordable Care Act exchanges.

• Check bills for errors. Request itemized bills for hospital stays and complex procedures. Dispute any mistakes.

• Ask for help. Hospitals and other health care providers may have financial assistance programs that could reduce or eliminate bills.

• Avoid using credit cards. Credit cards tend to have high interest rates that make debt harder to pay. Many health care providers offer interest-free payment plans that allow you to pay off your bill over time.

This article was provided to The Associated Press by the personal finance website NerdWallet. Want to suggest a personal finance topic that Quick Fix can address? Email apmoney@ap.org