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Most medical debt is coming off credit reports. Here’s what to do if yours doesn’t

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If you have medical debt weighing down your credit score, it may be wiped off your credit report in a few months.

Yet before you cheer the good news, first make sure your debt qualifies.

The three credit reporting companies — Equifax, Experian and TransUnion — recently announced that starting July 1, they will remove any medical debts that were sent to debt collectors and eventually paid off.

In addition, any unpaid medical debt won't appear on credit reports for a year, up from the previous 6 months, in order to give consumers time with providers and insurers to address the bill.

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In the first half of 2023, the credit reporting firms also won't include medical collection debt under at least $500 on credit reports.

"You can have an otherwise pristine credit score and this medical debt can bring you down," said Ted Rossman, senior industry analyst at Bankrate and CreditCards.com.

"Sometimes it is a simple insurance mix up, or it can be a life or death crisis."

If medical debt that has gone to collections is the only blemish on your report, once it comes off, your score could increase by about 100 points, Rossman predicts. The impact will be lower for someone who has other missteps, he said.

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Your credit score matters. It determines if you can get a home mortgage, as well as the interest rate you'll pay on any loans or credit cards.

It can also determine whether you can rent an apartment or even land a job. Almost half of employers check some or all of their candidates' credit reports, according to a 2018 report by the National Association of Professional Background Screeners.

Check your credit reports

After July 1, check to see if any paid medical debt that had been on your reports is gone. Thanks to the Covid-19 pandemic, you are entitled to one free credit report a week from each of the big three credit reporting businesses through the end of the year.

The reports are available through AnnualCreditReport.com.

"You should always be checking your credit report," said Chi Chi Wu, staff attorney at the National Consumer Law Center.

That's because mistakes can happen. More than one-third of Americans found at least one error on their credit report, according to a 2021 Consumer Reports investigation. However, the Consumer Data Industry Association, which represents the credit scoring companies, called the Consumer Reports story "completely false and misleading."

On the other hand, a 2012 study by the Federal Trade Commission found 25% of Americans had a mistake on their credit reports.

File a dispute

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If medical debt that should have been removed is still there, you can file a dispute to get it wiped off with each credit reporting company that shows the debt. Here are the links for each one:

You should also dispute it with the company that furnished the information; in the case of medical debt that is often a debt collector.

If there is debt that has been paid off yet appears as unpaid, it can get a little more complicated.

"We generally recommend that you mail a dispute through certified mail," Wu said.

Include documentation showing that the debt was satisfied, she said. It should go to both the credit reporting firms and the debt collector. (Here's a sample letter from the FTC for disputing errors on credit reports.)

The credit reporting agencies have up to 30 days to investigate a claim. It's not uncommon to have your dispute rejected, particularly if it is over whether it has been paid or unpaid, so you may have to dispute the debt a couple of times, Wu said. Be sure to include additional information in subsequent communication.

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