Knoxville, Tenn. (WATE) – If you have rising medical bills or know someone who does, medical debt has started to decline in credit reports. As of July 1, the three credit bureaus launched a new policy giving a break to people with medical debt.
TransUnion, Equifax and Experian began removing cleared medical debt from consumer credit reports last Friday. This means that if you have paid your medical bill in full and the debt is still on your credit report as a negative mark, that negative mark will now be removed. Plus, unpaid medical debt won’t show up on credit reports for a year.
“If your credit score goes up, it benefits you in a number of ways. Your interest rate will go down on the loans you take out,” said Tony Binkley, CEO of the Better Business Bureau of Greater East Tennessee. “I think it actually encourages people to pay off their medical debt because it will help them improve their score. Now, if you pay it back, it’s still there for a total of seven years. So if you pay it back now, it will leave right away.
Binkley also explains the benefits of unpaid medical debt no longer appearing on your report for up to one year, instead of the current six months.
“It gives you more time to pay that off before it affects your credit score,” Binkley said.
Records show that people with medical debt owe an average of between $5,000 and $10,000. The main drivers of medical debt are often unavoidable procedures. Emergency room visits represent 39% of medical debt, while specialist visits represent 28%, surgery 26%, childbirth 22% and dental care 20%. The report says medical debt prevents nearly one in five from reaching financial milestones, such as a new home.
“It’s a tool to be able to clean up your credit score and your credit report from a medical condition that you couldn’t control in the first place,” Binkley said.
Although medical debt is starting to fall off credit reports, which is good news, it doesn’t eliminate your medical bills. If you owe $250 or $50,000 in medical debt, these new changes do not alleviate your responsibility to pay the debt.
However, there are several things you can do to start paying off your medical debt. You can call the doctor and negotiate. Often, vendors are more than willing to settle on these things because they’re willing to be paid something, rather than nothing. Debt consolidation is also an option. If you have one or more medical debts and you just prefer to pay them off, you can consider debt consolidation through a personal loan.
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