Could credit scores rise with the new FICO model?

According to the New York Times, the new FICO model will NOT weigh medical debts as heavily as it has in the past.

Apparently medical debts account for almost HALF of all unpaid collections on credit reports.

Also new? FICO scores will also ignore any collections that have already been paid! In the past, FICO scores factored both paid and unpaid collections over $100.

The New York Times reports that people whose scores that are around 711, who currently have medical debt, could see their FICO scores rise 25 points! This could help those individuals get better interest rates or terms on their loans.

Those who have paid off their medical debts, or had them settled, should see the highest bumps in their scores.

This *Could* be great news for potential homebuyers — IF lenders adopt the new scoring techniques. Only half of FICO’s customers apparently use even the most recent model, set out in 2008. Fannie Mae and Freddie Mac use their own underwriting software, and the New York Times says that the versions of scoring techniques they use are even older.

Hopefully adjustments will be made, which could help many potential homebuyers.


Image courtesy of Stuart Miles /