FICO SCORE REVAMPING BENEFITS THOSE BURDENED BY UNPAID MEDICAL EXPENSES Most mortgage lenders use scores from FICO of San Jose, Calif., formerly known as the Fair Issac Corporation, to evaluate borrowers’ creditworthiness. Recently, FICO made a major announcement which could benefit millions of consumers with credit tarnished by medical debt. Consumers with stellar credit history except for outstanding medical bills and related expenses, will get a significant break from the three major credit-score companies reporting to FICO: Equifax, Experian and Transunion. These companies provide educational credit scores to borrowers seeking to assess whether they are an excellent, good or bad credit risk. FICO is adjusting the scoring formula by the end of 2015 because of a recent study by the federal Consumer Financial Protection Bureau (CFPB) that found that medical debit unfairly impacts too many credit reports. Because of the new scoring model, individuals with a median score of 711 — and an otherwise unblemished credit history, except for unpaid medical debts — may see their FICO score rise by 25 points. As a result, many consumers may qualify for more attractive interest rates on various loans, potentially resulting in thousands of dollars in savings. Citing situations in which consumers were unfairly penalized for miscommunications over who, patient or insurance provider, was truly responsible for portions of a medical bill, sometimes less than $100, a FICO spokesman asserted that this boost for low credit scores is long overdue. If you are looking to get the most accurate report of your credit worthiness, obtain your credit report from myFICO. In addition to your credit scores generated from the three credit score companies, your FICO credit report will come with “reason codes” that explain what can be done to improve a credit score
Posted on: Sat, 11 Oct 2014 23:17:38 +0000
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