Millions of consumers with low FICO scores are about to get a boost and access to lower cost loans.
Announcing a “a more nuanced way to assess consumer collection information,” the Fair Issac Corporation’s new model number nine for calculating a consumer’s FICO score will no longer include a ding for any bills that ended up in collections but have since been paid or settled.
In addition, unpaid medical bills will now have a lower impact on a consumer’s credit score. The median FICO Score for consumers whose only major derogatory mark are unpaid medical debts are “expected to increase by 25 points.”
Unfortunately, many mortgage lenders are still using older models of the FICO Score calculator. But if unpaid medical bills or old collection agency debts which have since been settled have been keeping you from securing a mortgage, or paying a higher rate, it might be worth shopping around.