New FICO Score Helps Medical Debt

Within the past year or so, FICO has released a new way to record and report medical debt collections, called FICO 9. This model will help Americans suffering from medical debt and can help combat the unequal effects. Most beneficial to the new method will be those who have completely paid their medical collections. It is said that FICO 9 will help lessen the impact of medical debt compared to other types of debt. 

FICO 9 will help your credit report as well as eventually increase your credit score by reporting in greater detail. This way creditors won't think you are a reckless consumer with credit card debt, but actually a victim of a serious injury or accident. Therefore you cannot be labeled a credit risk.

If you have only have a FICO 9 score, and no history of any other type of debt then you are in even better shape. In the new model medical debt is counted less, so if you have no previous debt your score may increase by 25 points. Furthermore that means better rates when looking for auto loans or credit cards.

However for huge purchases like buying a home and applying for a mortgage, FICO 9 will probably not have much of an impact, at least not for now. Unfortunately mortgage lenders are notorious for using older FICO models, usually FICO 7 and it may take a while until they start using the most recent FICO scoring system.

A common problem a lot of medical debtors see is incorrect medical billing, reporting, and accounts. Which then trickles down into insurance and can lead to an error in your coverage or a denial of a claim. Luckily FICO 9 will allow you to correct those mistakes or get them removed from your credit report which can drastically help you in the future.

All in all, the only thing that can protect your credit score 100% is by avoiding any and all collections, and that goes for any type of debt, not just medical.

We at Timothy J. Sierra Attorney at Law would like to state that our blog posts and links, on our web page or any other social media outlet, to any other web pages are not intended for legal advice. We are not responsible for third party website information. If one is in need of legal advice please contact an attorney directly.

Source: US News Health | Patient Advice