Medical debt prevents many from gaining financial stability. A change this month could help

Medical debt represents more than half of all debts in collections in the United States, and the problem disproportionately affects Black families and communities.

That’s according to a report called “The Racial Health and Wealth Gap” from the National Consumer Law Center. The report notes that 1 in 3 Black adults have past-due medical bills, compared to fewer than 1 in 4 white adults.

Medical debt can lower a person’s credit score by 50 to 75 points, according to Michelle Abernathy, a financial counselor with SmartMoney. And that can make it more difficult to buy a car, purchase a home and reach other financial milestones.

But starting July 1, the country’s major credit reporting agencies have changed their policies related to including medical debt on credit reports. Abernathy says that’s an important step in their right direction for many of the clients that SmartMoney serves.

Joining Cincinnati Edition to discuss the changes and what they mean for all of us are National Consumer Law Center Staff Attorney Berneta Haynes; SmartMoney Financial Counselor Michelle Abernathy; and SmartMoney client Carla Little.