Millions of Americans can expect to see their credit scores rise starting in July, as the U.S.'s three major credit reporting agencies announced that they'll be removing almost all medical debt from consumer credit reports.

Equifax, Experian and TransUnion all announced on Friday that effective July 1, 2022, any Americans who have paid off their medical debts will see that debt removed from their credit reports, even if debt collectors got involved.

Mediate Financial Services's Financial Advisor, John Ryan tells 21 News that this is a major win for consumers, stating that adding those debts can impact credit scores for years and make it difficult to get credit, find homes and find jobs.

In addition, the six month buffer for unpaid medical debts to appear on consumer's credit reports will be increasing to a full year. 

In a joint statement, the three agencies described this change as an important step to support consumers in the wake of the pandemic.

According to a report by the Consumer Financial Protection Bureau (CFPB) from June of 2021, about 20% of U.S. households face some sort of medical debt. That's equivalent to tens of millions of Americans.

In total, that's over $88 billion currently sitting in collections.

The CFPB also says its research indicates medical debt is the least predictive line of credit to predict consumers' likelihoods of repaying loans. 

In addition, the agencies are planning to remove unpaid medical debt under $500 from consumer credit reports beginning in the first half of 2023.