FICO is a credit rating system used by 90% of credit lenders in the United States. In essence, the higher your FICO score, the more likely you are seen as being able to pay back a loan. The new FICO 9 rating systems is now taking effect, and individuals could see an increase in their credit rating as a result.
For those out there with medical debt, it’s no big surprise that this type of debt can hurt your credit rating when sent to collections. The new FICO 9 scores however, don’t put as much weight to medical collections and if you do have these on your current credit report, you could see as much as a 25 point increase in your rating.
So why are those with medical debt getting a break? A few reasons actually. First off, even if you are a perfectly responsible individual, a major medical incident can all but break even the most steadfast saver’s bank account. Secondly, doctors and other hospitals have the power to transfer older payments to collections, which means that those that have been paying down their own bills can inadvertently hurt their credit scores when this happens.
There are other types of collection items such as phone bills, school loans, and energy bills that will be discounted. Also under this new system, paying off old collection items will increase your score even more. If you have had trouble paying down your old debts are can’t seem to ever get caught up on your finances, contact your local bankruptcy lawyer in Dayton Ohio to find out if bankruptcy could help you dissolve your debt and help you start rebuilding your credit score.