A report by the Urban Institute reveals some great news for consumers. The institute has been studying how recent changes in reporting medical debt has affected our credit scores. And it found the average score has increased by about 30 points, from 585 to 615 points.

Let me explain. Medical debt is a beast. More than 66 percent of folks forced to declare bankruptcy do so because of medical debt. And even those who don’t often find themselves crippled financially because the debt drags down their credit score, which affects everything from their ability to buy a car to how much they pay to insure that car.

But here’s the rub. Medical debt is not a good predictor of credit risk.  In fact, more often than not,  it reflects the difficulties of navigating the complexities of medical billing and insurance reimbursement.

So the Biden administration wants to remove medical debt completely from credit reports. Toward that end, the Consumer Financial Protection Bureau took big steps last year. In July, all paid medical collections were supposed to be removed from your report along with any medical debt less than a year old. Then in August, the CFPB announced that medical debt in collections would no longer be used to calculate your score. And finally, after April of last year, no medical debt under $500 should appear on your credit report at all.

So, if you have had medical debt, here’s Deanna’s Do List:

• Pull your credit report from all three bureaus. You can get one for free every week at www.annualcreditreport.com
• if you find medical debt that’s less than $500 or less than a year old, write all three credit bureaus. it’s important to send it by certified mail.
• Do not contest it online. Some of the bureaus force you to sign away your right to sue if you contest anything online.

Here’s the contact information for the three bureaus:

Equifax:

• By mail: Use the following address:
  • Equifax
    P.O. Box 105788
    Atlanta, GA 30348

Transunion:

• By mail: Use the following address:
• TransUnion LLC
  P.O. Box 2000
  Chester, PA 19016

Experian:

• By mail: Use the following address:
  • Experian
  • P.O Box 4500
    Allen, TX 75013
    
    

Some of you may remember I told you this summer that the New York legislature approved a bill making it illegal for any medical facility to report medical debt to the credit bureaus, no matter the amount. It just waits for the governor’s signature, and her office tells me she’s still reviewing that legislation. So, for now, we should defer to the national rules put in place by the CFPB.