What you need to know about medical debt and your credit scores

Dear Liz: I disputed a medical charge for around $350. A few months later I received a collections notice. I then called the medical provider, who said they would suspend the collections while the dispute was being reviewed. There was no further communication for over a year, then out of the blue I received a derogatory remark from the collections agency. I monitor my credit scores via my credit card accounts. Two cards are driven by TransUnion data. One reported a drop from 802 to 706 while the other reported a drop from 809 to 774. My other card provides a score driven by Equifax and that one remained unchanged at 822. I’m curious about the discrepancies in these scores, and also about the length of time it will take for my credit score to recover if I do not try to resolve the derogatory remark or disputed medical bill.

Answer: Credit scoring formulas vary considerably in how they treat medical debt. Some older scoring models treat unpaid medical bills the same as any other collection account. Newer formulas may treat medical debt less harshly, reflecting research that shows these bills aren’t as reliable an indicator of creditworthiness as other collection accounts. Some of the latest formulas ignore paid medical debt entirely.

Earlier this year, the

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