Great news for our clients with medical collections!
Today, July 1st, new changes take effect concerning medical collections and credit reports from the three credit bureaus. It has been estimated that this will impact millions of people and could wipe out up to 70% of medical debt from credit reports.
A collection is a debt that has been assigned/sold to a third-party debt collection agency due to negligent payment of the borrower. This adverse credit is reflected in the loan applicant's credit score.
Medical collections can also make you seem less creditworthy and many times we find they have already been resolved yet they still remain on the credit report. Many loan programs require collections to be resolved prior to loan approval. Other loan programs already disregard medical collections and do not require them to be addressed. After these July 1 changes, it's recommended that you get new copies of your credit reports. You can get them free at www.annualcreditreport.com. If your paid medical debt is still on there, you’ll need to contact each agency separately and file a dispute. They have 30 days to investigate your disputes.
Scissortail Financial is excited to see these changes. Going forward, it should be easier for our borrowers to obtain loan approval and the credit score increases should lead to better interest rates. Here are the highlights of these new changes and what you should expect to see changed on your personal credit reports.
- Effective July 1st, these changes will take place for Equifax, Experian, and TransUnion credit reports
- PAID medical collections will be deleted. Before this change, they have remained on a credit report for up to 7 years
- Creditors have to wait 1 year before reporting to the bureaus. This is an increase from 6 months previously.
- Starting in January 2023, medical collections under $500 will NOT be reported.
- These changes will occur at the credit bureau level. Credit scoring formulas will be impacted which could lead to a change in credit score.
Call us today to take the first step.
You will be glad you did.