Medical Debts Are Being Removed from Credit Reports: The 411
Exciting changes are on the horizon for your credit report! On January 7, The Consumer Financial Protection Bureau (CFPB) finalized a new rule that will remove an estimated $49 million in medical bills from consumer credit reports.
This move is set to alleviate some of the financial stress associated with medical debt and improve the accuracy of credit reporting for around 15 million Americans.
Here’s what you need to know and how this change can benefit you.
What’s Changing?
Starting soon, medical bills will no longer be included on your credit report. Traditionally, unpaid medical debts could negatively impact your credit score, even if you were actively working on paying them down. This rule aims to prevent medical debt from dragging down your credit score, especially when such debts often arise from unexpected and unavoidable health issues.
How This Impacts You
- Improved Credit Scores:
With medical debt removed from your credit report, many will see an improvement in their credit scores. This can open doors to better interest rates on loans, mortgages, and credit cards, potentially saving you thousands of dollars over time. - Greater Financial Freedom:
Without medical debt affecting your credit, you’ll have more opportunities to focus on other financial goals, such as saving for an emergency fund, a new home, or retirement. This change can provide a clearer picture of your financial health and help you create a more manageable debt reduction plan. - Reduced Stress:
Medical emergencies are stressful enough without the added worry of how they will affect your credit score. This rule change alleviates some of that burden, allowing you to focus on recovery and financial stability without the looming fear of credit damage.
What Should You Do Next?
- Review Your Credit Report: Regularly check your credit report to ensure all medical debts have been removed. An exact date hasn’t been set but removal should take place in the next few months. You can access your report for free from the three major credit bureaus (Equifax, Experian, and TransUnion) at AnnualCreditReport.com.
- Build or Rebuild Credit: Use this opportunity to strengthen your credit profile. Make consistent, on-time payments, keep your credit utilization low, and consider using credit-building tools if needed. (Not sure where to start – check out What you Need to Know About Building Credit)
- Stay Informed: Stay updated on further developments related to this rule and other financial regulations that may affect your financial health.
_______________________
This change is a significant step towards fairer credit reporting and provides a chance for many Americans to improve their financial outlook.
At America Saves, we’re here to help you navigate these changes and make the most of your financial opportunities. Stay informed, keep saving, and remember, every small step you take brings you closer to your financial goals. Start small – think BIG!
For more tips and updates on how to manage your finances effectively, visit AmericaSaves.org and take the pledge today!
CHECK OUT OTHER SAVINGS JOURNEYS FROM SAVERS JUST LIKE YOU
Budget like Nohemi
By Nohemi
Nohemi found out about America Saves a few years ago as an undergraduate at the University of Illinois at Chicago. She remembers attending a University of Illinois Saves event where she decorated a piggy bank and took the Pledge, but college life made her put the thought of saving at the back of her mind.
Saver Story: Set a Goal, Make a Plan!
By Shannon
We've chosen Shannon as our Saver of the Month! Her approach to saving for her family’s dream home is a g...
Saving Early: Key to Successful Future
By Johnnie Lovett
For Johnnie Lovett, a Young Illinois Saver, saving has been a habit since he was a teenager. “As a teenag...
The Gift of Homeownership
By Quaneka Willis
Quaneka Willis, a single mother of three children, was receiving rental assistance through the Housing Au...
Saving With My Boys
By Kelly
Kelly has made saving a family effort. She started her boys saving early. “Probably 3,” Kelly told us, “w...
Saver Story: Set a Goal, Make a Plan!
By Shannon
We've chosen Shannon as our Saver of the Month! Her approach to saving for her family’s dream home is a great example of how #ThinkingLikeASaver can look different for everyone, but has great payoffs and rewards.
Put 20 Percent Away
By Melissa
“I am a single mother, and I make ends meet for me and my daughter, but I wanted to put money away for my daughter for a college fund. So I started saving 20 percent of my paycheck every month to put it away in a savings account with a high Annual Percentage Yield (APY). By the time my daughter is 18, I will have saved nearly $90,000.”
A Think Like A Saver Attitude
By Melissa
Melissa has always been thrifty with a #ThinkLikeASaver attitude. This served her family well when her hu...
Saving for a Bright Future
By Kristin Hendricks
Kristin Hendricks, a single mother from Texas, understands the importance of saving money and following a...
Developing a Savings "Game Plan"
By Eunice Diaz
Eunice Diaz, a teacher in Colorado Springs, had been noticing a pattern. Despite the fact that she and he...
Savings #ImSavingForSweepstakes
#ImSavingFor Winner Story
By Pedram R.
America Saves awarded one lucky saver, Pedram R. from California, $750 for sharing his #ImSavingFor story...
A Think Like A Saver Attitude
By Melissa
Melissa has always been thrifty with a #ThinkLikeASaver attitude. This served her family well when her husband lost his job in 2014. Using their savings, Melissa’s family stayed afloat while her husband found a new job.
Saving is a Family Affair
By Jeff
Saving is truly a family affair for Jeff’s household. During America Saves Week 2019, he pledged to save for retirement. But making a commitment and creating a plan to save isn’t a new concept for him.
Put 20 Percent Away
By Melissa
“I am a single mother, and I make ends meet for me and my daughter, but I wanted to put money away for my...
A Think Like A Saver Attitude
By Melissa
Melissa has always been thrifty with a #ThinkLikeASaver attitude. This served her family well when her hu...
Don’t Laugh at Saving Spare Change
By Brittany
Virginia Saves saver, Brittany, decided to start saving again when she became a single mother. She thinks...
Jump-Starting a Financial Makeover
By Nichelle Johnson
Nichelle Johnson, a single mom with two teenage children, knows what it’s like to stretch a dollar. When ...
Budget like Nohemi
By Nohemi
Nohemi found out about America Saves a few years ago as an undergraduate at the University of Illinois at Chicago. She remembers attending a University of Illinois Saves event where she decorated a piggy bank and took the Pledge, but college life made her put the thought of saving at the back of her mind.
Saving With My Boys
By Kelly
Kelly has made saving a family effort. She started her boys saving early. “Probably 3,” Kelly told us, “w...
Put 20 Percent Away
By Melissa
“I am a single mother, and I make ends meet for me and my daughter, but I wanted to put money away for my...
Saving is a Family Affair
By Jeff
Saving is truly a family affair for Jeff’s household. During America Saves Week 2019, he pledged to save ...
Starting and Continuing a Savings Journey
By Kiara Hardin
When Kiara Hardin, now a junior at Western Illinois University, became an intern with the Chicago Summer ...
Taking Back Control Over Finances
By Nadine Bialo
After becoming a Virginia Saver and getting help from BankOn classes and coaching, Nadine Bialo took back control over her financial affairs.
Developing a Savings "Game Plan"
By Eunice Diaz
Eunice Diaz, a teacher in Colorado Springs, had been noticing a pattern. Despite the fact that she and he...
From Overwhelmed to In Control
By Debi
In 2017 Debi felt overwhelmed. Her credit cards were maxed, and she wasn't exactly sure how to handle it....
Getting Out of Debt
By Tonya Shelton
In 2004, Tonya Shelton was facing financial ruin. Barely making more than minimum wage and having lost he...
Inspired to Build Savings By Starting Small
By Sharon
With little-to-no money in the bank and living on a limited income with her adult daughter, Sharon wasn’t...
Savings #ImSavingForSweepstakes
#ImSavingFor Winner Story
By Pedram R.
America Saves awarded one lucky saver, Pedram R. from California, $750 for sharing his #ImSavingFor story. Pedram said, “Saving is important to me because it proves I am not willing to buy unnecessary things to please others or to be perceived as successful.”
Saving is a Family Affair
By Jeff
Saving is truly a family affair for Jeff’s household. During America Saves Week 2019, he pledged to save for retirement. But making a commitment and creating a plan to save isn’t a new concept for him.
If we feature you in our newsletter, you get $50.