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Credit Reports & Scores

Customers Get a Break on Medical Debt

Consumers get more time to settle a medical bill before it harms their credit.

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Medical debt is becoming a little less painful. Beginning September 15, the three major credit agencies—Equifax, Experian and TransUnion—are waiting 180 days from the time a medical bill becomes delinquent before adding it to a patient’s credit report. The change is designed to give consumers and insurance companies time to resolve billing disputes. Plus, the credit agencies are removing accounts that are in default if an insurer later pays the debt. If your credit report contains a medical collection account that should no longer be there, you may have to wait a few weeks to see it disappear.

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Meanwhile, the latest models of the FICO and VantageScore credit scores penalize delinquent medical bills less harshly than other types of unpaid debt. FICO found that the median credit score of a consumer whose only significant black mark involves medical debt is about 25 points higher using the new FICO model than with previous scoring formulas. Many lenders who use FICO scores, however, have not yet adopted the new FICO score (the new VantageScore is being released this fall).

You can get free yearly copies of your credit reports at www.annualcreditreport.com. CreditKarma.com offers free access to updated information from your Equifax and TransUnion credit reports, plus VantageScore scores from each bureau.

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