Medical Debt, New FICO Score Good News or No News

Last week, FICO, the nation's top credit score provider, announced upcoming changes to the way some debts impact your credit score. This could be good news for thousands of people, if lenders adopt this new model.

The first change involves the way medical debt impacts a credit score. Under the new plan, “the median FICO score for people who have only unpaid medical debt on their report will jump by about 25 points.” The debts will still be shown on a credit report; it is the impact that will lessen.

The second change is to paid or settled medical collection accounts. In the past, these accounts have negatively impacted a FICO credit score the entire time they were listed on a credit report. Now, paid or settled medical collection accounts will be ignored.

How much of an impact this will have on people remains to be seen. The new FICO 9 score model will debut this fall, but lenders may not adopt the model.