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Coming changes in credit scoring may aid those with medical debt

Washington residents work hard to provide for their families and maintain an acceptable credit rating. However, no matter how well-prepared a family may be, medical debt can often undo all that had been accomplished. New changes in the way credit is scored may actually help some of these families.

FICO has announced that it will be making changes to how medical bills in collections may influence credit scores. More than 63 million Americans have problems with medical accounts on their reports. According to statistics, well over half of all bills that have gone to collection agencies are comprised of medical bills. Possibly as a result of so many consumers struggling with this type of uncontrollable debt, FICO is recalibrating how much weight medical bills will have on a consumer's borrowing ability.

Another change that will go into effect this fall is that paid accounts will now be reflected as such on consumers' reports. As is stands right now, even if a consumer paid an account in full once contacted by a collection agency, the account would continue to be reflected as unpaid, and therefore have a negative impact on credit ratings. With the coming change, a delinquent bill will not continue to drag down a consumer's score once it is paid in full.

The announced revisions will start to be phased in later this year, but it may be a couple of years before all consumers see a positive change in their credit scores as a direct result of the changes. In the meantime, the relatively small increases in credit scores may not make an appreciable difference in the lives of those Washington families that are feeling completely overwhelmed by their medical debt. These families may wish to take proactive measures to research the benefits of filing for bankruptcy. Discharging unforeseen medical and similar debt may enable these families to realize a financial future they once thought unobtainable.

Source:, "Medical Debt Still Stinks, But New Credit Score Change Will Make It Hurt Your Life Less", Kate Cox, Aug. 8, 2014

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