Good Credit Score News for People with Medical Collections

Last Summer, FICO (the company that creates the software used to calculate credit scores), released a new update to its scoring system called FICO 9. The goal of FICO 9 was to reduce the effect past due medical debt has on a person’s credit score, especially if they have an otherwise clean credit history.

Why is this a big deal? Consider these facts:

  • 64.3 million Americans have past due medical bills on their credit reports… that’s 1 in 4 adults in our country.
  • •About 1 in 3 families in America suffer financial burdens because of medical bills
  • •Families with 3 kids that make less than $50,000 a year, or individuals earning less than $30,000, are significantly more likely to suffer financially from unexpected medical expenses. (That’s based on earning less than 250% of the federal poverty level.)
  • •Doctors and hospitals can turn bills over to collection even before your insurance has paid (and we all know how long that can sometimes take).
  • •An unpaid medical bill as little as $100 can drop your credit score up to 100 points.

So FICO 9 should fix this, right? Not so fast…

It takes time for new scoring models to take effect. Nearly a year has passed since the release of FICO 9. Smaller, newer lenders have adopted FICO 9 faster. It’s the big banks and lending institutions that need more time to “run the numbers” to decide if they want to change. (Yes, “IF”. They do not have to use FICO 9 if they don’t want to.)

If you have unpaid medical collections, there are a few things you can do to get the most boost from FICO 9.

  • •Keep the rest of your credit report squeaky clean! Pay on time every month. Don’t take out any new lines of credit just because you can. If you need help evaluating your credit report, please contact us. We’ll help you get started with a free consultation.
  • •Before asking for a loan, credit card, or other line of credit, ask the lender if they are using the new FICO 9 score. If not, keep shopping.
  • •Start paying down your medical collections, especially if they are recent. FICO 9 ignores medical collections that have been paid. Don’t worry about older collections that are due to soon fall off your credit report.

Once FICO 9 is in full effect (likely by this summer or fall), people with past due medical debt should see their credit scores go up 25 points or more. If you get those medical debts paid down, it may go up even more.


If you have any questions, please give us a call at 770-952-5168 or contact us online.

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Other articles that may interest you:
3 Instant Credit Score Fixes
Keeping the Wolves at Bay – Safely Communicating With Debt Collectors
7 Ways to Improve Your Credit

This information is intended for informational and educational purposes only and not as legal advice. If you have concerns about your credit report, harassment, identity theft, illegal collections activity, garnishments, or property liens, you should consult an attorney who specializes in consumer rights and defense.

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