There are dozens of credit score models generated by each credit bureau and unique to different industries like mortgage lenders, credit card issuers, auto loans and insurance providers.  This risk assessment isn’t consistent from industry to industry or even lender to lender. 

So why all the excitement about FICO 9 which FICO says will ignore collection accounts that have been paid and reduce the impact of unpaid medical collection accounts on the score?  It is well know that any medical event can generate many bills and quite often a consumer is unaware of outstanding balances until they are noticed on a credit report in the form of a collection … often when pulled for a mortgage loan which can be a bad surprise! Given this history of medical collections, it is a great move to reduce the impact they have on the credit score.

And, even with FICO9, paid or unpaid collections will continue to show up on credit reports for seven years from the date of the first delinquency.  Lenders can still see those debts when they decide whether to extend credit and at what price. Currently there are lenders who do disregard medical collections, however these do weigh down your scores. 

Don’t get too excited… the mortgage industry is often two years behind other industries in adopting new scoring models. Many lenders still have not upgraded to FICO 8, which was introduced in 2009. In the meantime, even if a new loan isn’t in your radar, obtain your free credit reports annually or subscribe to an online site to track your reports and scores.