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Settled Medical Debt Is Now Dropping Off Credit Reports — Here's How to Check Your Record and Make Sure It's Right

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If medical debt you've already paid has been lingering on your credit report, you may want to see if that has changed.

As of Friday, the first phase of changes to when such debt will show up on credit reports takes effect. Specifically, the three large credit reporting firms — Equifax, Experian and TransUnion — no longer will include medical debt after it's paid off. Under prior practice, it could remain on your record for seven years.

Additionally, consumers now get a year, up from six months, before unpaid medical debt appears on credit reports once it goes to a collection agency. And more changes are coming: In the first half of 2023, the credit bureaus will stop including any unpaid debts that are less than $500.

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Collectively, the changes "should have the impact of improving credit scores for millions of Americans," said Jeff Smedsrud, co-founder of HealthCare.com.

Medical debt can hurt your credit score

Roughly $88 billion in medical debt appeared on consumer credit reports as of June 2021, according to the Consumer Financial Protection Bureau. Additionally, 58% of bills that were in collections and appeared on credit reports were medical-related, and roughly 43 million credit reports showed such collections.

This can lower your score, which makes it harder to secure loans or other credit, or get favorable interest rates if you are approved.

"A small debt of $25 ... can really negatively impact a credit score — just the reporting of it," said Leslie Tayne, founder of Tayne Law Group and an attorney who specializes in consumer debt relief and debt settlement.

"It could mean the difference between being able to borrow [from a lender] and not being able to borrow," Tayne said.

The credit agencies say their new policies will eliminate roughly 70% of medical debt from credit reports.

Even so, consumers may want to confirm that their paid-off medical debt no longer shows up, according to U.S. PIRG, an advocacy group. 

How to check your credit report

You can get a free copy of your report from each Equifax, Experian and TransUnion at annualcreditreport.com. Through the end of 2022, you can get free weekly reports through that site instead of the usual once a year.

Look specifically for medical debt that you already paid in full, U.S. PIRG advises. [That's the debt that ought to disappear under the new rules. Check the section where the report "flags" new debt, as well as the "account information" or "collections" section of the report.

If you see debt that you've already paid off (or any other error), you can dispute it directly with the credit reporting firm whose report has the mistake. Each of the reports may contain different information, so it's worth checking all three.

Federal law requires the credit bureaus to investigate disputes within 30 days (with some exceptions) and notify you within five days once the investigation is done.

If your dispute is denied or the error is not removed from your report, you can file a complaint with the Consumer Financial Protection Bureau, U.S. PIRG notes.

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