Improvements noted in medical bills included in credit reports – but not so much in the South, bureau asserts

If you reside in the South you are “most likely” to have medical bills on your credit reports – making you among 15 million Americans who have the invoices on their credit summaries, according to a study issued Monday by the federal consumer financial protection agency.

The agency, the Consumer Financial Protection Bureau (CFPB), said the millions of those who have medical bills on their reports comes despite changes in 2022 announced by the national credit reporting firms: Equifax, Experian, and TransUnion.

However, the study also indicates that the number of persons with medical bills in collections on their credit reports has declined by about nine percentage points since the firms announced their changes in spring, 2022.

According to the bureau, the three firms took steps to remove many medical bills from the reports “in part because of the recognition that they hold little predictive value.” However, the agency added, findings from its latest research show a need for further reforms.

Those findings include that 15 million Americans with medical bills on their report disproportionately live in the South and low-income communities. The agency said that, collectively, those persons have more than $49 billion in outstanding medical bills in collections.

The bureau said of the 15 million with medical bills on their credit reports, many live in low-income communities and the South. “The credit reporting changes were slightly less likely to help Americans in lower-income communities compared to those in higher-income communities,” CFPB said. “The changes did not do as much for individuals residing in the South. On average, people living in the South continue to have the most medical bills in collections and for the largest dollar amounts.”

Other key issues identified in the study included that the average medical balance on credit reports increased from $2,000 to more than $3,100, and that most medical collections balances stayed on credit reports.

“This is the CFPB’s second analysis of the changes made by the three national credit reporting companies to reduce the number of medical bills on credit reports,” the bureau said. “Today’s report follows the start of a CFPB rulemaking that will consider options to restrict the reporting of allegedly unpaid medical bills on credit reports.”

The agency asserted that in a report issued two years ago it found an estimated $88 billion in medical bills on Americans’ credit reports. “Following that study, the three nationwide credit reporting companies – Equifax, Experian, and TransUnion – announced they would no longer report certain medical bills in collections. The companies announced they would increase the time before medical bills in collections can appear on credit reports – from 180 days to one year. Second, the companies would stop reporting medical bills that had been in collections but were resolved. Third, the companies would remove medical bills below $500 from credit reports.”

Monday’s study, however, found the number of people with medical bills in collections on their credit reports has declined, CFPB said. As of June 2023, about 5% of Americans had unpaid medical bills on their credit reports – down from 14% in March 2022. “Older Americans saw the largest improvement – 8.4% of older Americans had medical bills on their credit reports in March 2022 compared to below 3% in June 2023,” CFPB said.

Still, the bureau said, it will “continue to prioritize fixing the credit reporting market, including issues that involve the reporting of medical bills.”

CFPB Finds 15 Million Americans Have Medical Bills on Their Credit Reports

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