The Three Major Credit Bureaus Are Taking Steps To Improve Your Credit Score.

The majority of your medical debt will no longer affect your credit score as of July 1. You’ll still have to pay it back.

In a news release, Michael Pieciak, commissioner of the Vermont Department of Financial Regulation, lauded the big adjustment on medical debt by the three main credit reporting companies — Equifax, Experian, and TransUnion — as a “very welcome step.”

“It’s estimated that over 30,000 people in our state are presently dealing with medical debt in collections,” Pieciak added. “By enhancing the creditworthiness of tens of thousands of Vermonters, this news will have a substantial impact.”

However, Pieciak stated that additional effort is required because the underlying debt still exists, and medical costs remain the largest cause of bankruptcy in the United States.

Medical Debt Removed From Credit Report.

Nearly 70% of medical debt will be removed from Americans’ credit files by the three credit bureaus. The firms also announced new guidelines that would double the time it takes for medical debt in collections to affect credit reports, from six to twelve months. Medical debts under $500 will no longer be included in the three agencies’ credit reports for customers starting next year.

A bad credit score has an impact on practically every element of a person’s financial life, making it more difficult and expensive to borrow money for anything from automobiles to houses, as well as affecting one’s ability to find work. Self-esteem decreases as a result.

More: ‘This is going to bankrupt me,’ say Americans who owe $45 billion in medical debt.

Medical debt, unlike mortgages or personal loans, is a poor predictor of a person’s capacity to make payments since it is frequently created by an emergency and fluctuates considerably depending on insurance coverage and hospital billing processes, according to Pieciak.

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