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FICO to give less weight to unpaid medical bills that are with a collection agency.

According to the Wall Street Journal Fair Isaac said Thursday that it will stop including in its FICO credit score calculations any record of a consumer failing to pay a bill if the bill has been paid or settled with a collection agency. The San Jose, Calif., company also will give less weight to unpaid medical bills that are with a collection agency.

“Under the current system, collections can impact credit scores as much as foreclosures and bankruptcies do. But the infractions are often small. Borrowers can be on time paying their debts, for example, but thrown by a medical emergency.

Collections stay on credit reports for as long as seven years, even if a borrower has paid off that balance and remained up-to-date on other debts.”

Note from Diane – it is about time that the credit reporting companies used a little common sense in their calculations.

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Diane L. Drain

Diane L. Drain, bankruptcy attorney, retired law professor, mentor and community spokesperson.

About Diane Drain:

Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.

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