VantageScore excluding medical bills from credit scores


On Tuesday, VantageScore Options LLC said it may stop medical payments that have been sent to collections in its credit scoring model, according to a Wall Avenue Journal report.

The VantageScore, which was created as a three-way partnership between major credit scoring companies, is simply not used as widely as the FICO score, but the transfer relies on the latest adjustments from the credit bureaus. and can lead to more constructive downward adjustments. the street.

Key points to remember

  • The VantageScore credit scoring model will soon no longer consider unpaid medical collections when calculating scores.
  • The move follows changes made by the credit bureaus to reduce the impact of medical levies on customer credit file data.
  • The credit scoring company cites the fact that medical payments in collections have little predictive value in relation to a customer’s creditworthiness.
  • The company says hundreds of thousands of buyers could even see an increase of up to 20 points in their VantageScore credit scores.

VantageScore Takes the Next Level of Commerce in Medical Debt Processing

Regardless of widespread health insurance coverage in the United States — more than 90% of residents have some type of health insurance — about 9% of individuals have medical debt, according to a latest assessment from Kaiser Household Basis.

Of the 23 million people surveyed, three million have more than $10,000 in unpaid medical payments, and black adults, the sick and other people with disabilities are disproportionately affected.

However, unpaid medical payments are not a great predictor of whether or not someone is paying their debts, explains VantageScore Options LLC, which is what credit scores are designed to do. As a result, competitor FICO decided to stop considering unpaid medical collections in its latest credit score variations from October this year.

However, the choice did not fall from the sky. VantageScore started reducing the impact of medical payments on some of its credit score models a few years ago.

And in March, the three national credit bureaus, which created VantageScore as a three-way partnership, announced they would remove all paid health care accounts from credit scores, extend the reporting grace interval of 180 days to a full year. and will soon remove all unpaid medical collections under $500.

So what’s the catch? VantageScore indicates that hundreds of thousands of buyers can see a credit score increase by up to 20 points and that more than 2,600 lenders and other financial institutions use its credit score. Nevertheless, its competitor, the FICO rating, essentially remains the most widely used rating in loan screenings. So while this may be a constructive change, it won’t have much of a direct effect on buyers, at least instantly.

Nonetheless, it keeps the ball rolling on the credit reporting company’s initiative to process medical payments more appropriately. For example, the latest FICO scoring model excludes paid medical accounts and other assortment accounts, and following VantageScore’s decision to remove medical collections altogether, FICO could also be next.


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