As small medical debts are removed, some see their credit scores rise : Shots

Kayce Atencio, who has been shadowed by medical debt for most of his adult life, had been unable to rent an apartment because of poor credit due to medical debt, he said. Recent reporting changes by credit rating agencies have removed many debts from consumer credit reports and lifted scores for millions, a new study finds.

Rachel Woolf for KFF Health News

The share of American consumers with medical debt on their credit reports has declined dramatically over the past year as major credit rating agencies removed small unpaid bills and debts that were less than a year old, according to an analysis published Thursday from the nonprofit Urban Institute.

At the same time, millions of Americans have seen their credit scores improve, making it easier for many to get a job, rent an apartment, or get a car.

“This is a very significant change,” said Breno Braga, an economist at the Urban Institute and a co-author of the study. “It affects a lot of people.”

For years, medical debt has depressed credit scores, undermining the financial security of tens of millions of patients and their families.

Under mounting pressure from patient advocates and government regulators, the three major credit agencies over the last two years have taken a series of steps to remove some medical debts from credit reports, including unpaid medical bills under $500.

The changes appears to be having an impact. As of August, just 5% of adults with a credit report had a medical debt on their report, down from almost 14% two years earlier, the Urban Institute analysis found.

Researchers also found that Americans with a medical debt on their credit…