2022Credit Reports

Written By ESR News Blog Editor Thomas Ahearn

Effective July 1, 2022, the three nationwide credit reporting agencies (NCRAs) – Equifax, Experian, and TransUnion – will remove nearly 70 percent of medical collection debt tradelines from consumer credit reports to support consumers faced with unexpected medical bills, according to a joint statement from the three NCRAs.

In addition to paid medical collection debt no longer being included on a credit report, the time period before unpaid medical collection debt appears will be increased from six (6) months to one year, giving consumers more time to work with insurance and healthcare providers to address debt before it is reported.

In the first half of 2023, Equifax, Experian and TransUnion will also no longer include medical collection debt under at least $500 on credit reports. According to the Kaiser Family Foundation, two-thirds of medical debts are the result of a one-time or short-term medical expense arising from an acute medical need.

After two years of the COVID-19 pandemic and a detailed review of medical collection debt on credit reports, the NCRAs are making changes to help people to focus on their personal wellbeing and recovery. The chief executive officers (CEOs) of the three NCRAs provided a joint statement about their decision:

“Medical collection debt often arises from unforeseen medical circumstances. These changes are another step we’re taking together to help people across the United States focus on their financial and personal wellbeing,” said Equifax CEO Mark W. Begor, Experian CEO Brian Cassin, and TransUnion CEO Chris Cartwright.

The Consumer Financial Protection Bureau (CFPB) has released a bulletin about “Medical Debt Collection and Consumer Reporting Requirements in Connection with the No Surprises Act” to remind credit bureaus of their legal obligations under the “No Surprises Act” that protects consumers from unexpected medical bills.

Companies that furnish information to credit bureaus about medical debts prohibited by the No Surprises Act may face legal liability under the Fair Credit Reporting Act (FCRA). The bulletin advised credit bureaus that FCRA accuracy and dispute obligations apply to debts that exceed the amount permitted by the No Surprises Act.

The CFPB bulletin about the No Surprises Act – which took effect on January 1, 2022 – reminded debt collectors furnishing information about unpaid medical debts to credit bureaus that they must have written policies and procedures regarding the accuracy and integrity of consumer information provided to these credit bureaus.

Credit bureaus preparing a consumer report must follow reasonable procedures to assure the maximum possible accuracy of the information contained in the report. Both credit bureaus and furnishers must conduct reasonable and timely investigations of consumer disputes to verify the accuracy of consumer information.

For furnishers and credit bureaus, the accuracy and dispute obligations imposed by federal consumer financial protection law apply to debts from charges that exceed the amount permitted by the No Surprises Act. The CFPB will work with the U.S. Department of Health and Human Services (HHS) to address medical debt abuses.

“Too many Americans have been shocked by surprise medical bills and forced to pay up through credit report coercion,” CFPB Director Rohit Chopra stated in a news release about the bulletin. “Our action today should serve as a reminder not to collect on or furnish credit reporting information about invalid medical debt.”

Unexpected medical expenses and media debt were magnified by the COVID-19 pandemic. In 2021, the Federal Reserve Board reported that 17 percent of adults had unexpected medical expenses in the past 12 months. In 2014, the CFPB published a report showing 43 million Americans had overdue medical debt on credit reports.

Employment Screening Resources® (ESR) – a service offering of ClearStar, a leading HR-technology company specializing in background, drug, and medical screening – provides employers with employment purpose credit reports in compliance with federal, state, and local laws. To learn more, contact ESR today.

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