The three major credit reporting bureaus -- TransUnion, Experian, and Equifax -- have announced changes to how they report medical debt on credit reports.

If you have paid your medical debt in full, and it’s still on your credit report as a negative mark, it will soon be removed. And, starting in January 2023, medical collections less than $500 will no longer be reported by the credit bureaus at all. This is a nice first step, but it needs to go much further.

Eliminating medical debt of less than $500 from credit reports disproportionately benefits the middle class and leaves out the most vulnerable. That’s because, the more income decreases, the more medical debt increases.

Low-income families are most likely to have medical debt in excess of $500, due in part to not having access to quality health insurance. The stats make the inequity clear. For example, most of the states in the South have not expanded Medicaid to cover families most in need. These states also have the highest rates of medical debt in collections. When you take into account 54% of Black people in the U.S. live in the American South, it’s not hard to see how the unequal impact hits Black and Brown families the hardest.

The credit scoring system is riddled with inherent racial biases. More than 1 in 5 Black consumers and 1 in 9 Hispanic consumers have FICO scores below 620, giving them a credit score labeled as “Fair” and more likely to be delinquent. At the same time, 1 out of every 19 white people are in the sub-620 category.

The factors that go into a credit score: payment history, length of credit history, amount of debt, and amount of new credit are all reflective of centuries of racist policy decisions that prevented Black communities from accessing and building wealth. Credit scoring does not include things like positive rental and cell phone payment history, which would include a much more racially and ethnically diverse swath of consumers.

Unexpected medical debt often caused by life saving treatment should not destroy someone’s credit rating, especially when low credit scores can keep people from buying a house, or a car, or even from getting hired for a job.  

Demand the credit reporting agencies, including Equifax, Experian, and TransUnion remove all medical debt from credit reports by adding your name now!