By Anessa V. Cohen

When people go to apply for a mortgage (or any type of loan, for that matter), the first question always asked of the borrower by the lender is, “How is your credit?” Since a major part of the acceptance process of getting a loan is based on a borrower’s credit report and the scoring of the credit report, trying to achieve the best score possible at all times becomes a priority for all borrowers hoping to get a loan or mortgage at the best rate offered by the lender.

Even those with stellar credit and a history of making payments on a timely basis have found their credit scores taking a dive and putting them on shaky ground for getting any financing when unexpected medical collection accounts suddenly appear on their otherwise clean credit reports. These collection accounts have played havoc with many. Even when they are erroneous, because they are with collection companies as opposed to the particular doctor or medical facility that originally billed, they can take months, if not longer, to resolve and remove from credit reports–unless they bite the bullet and just pay whatever the collection companies demand.

Last week opened a new door as FICO (Fair Isaac Co., the company that translates the credit reports into scoring modules) unveiled enhancements to its credit score model, which includes new methods for evaluating consumers with differentiating medical debt from non-medical debt.

Rather than classifying a consumer as someone who paid or did not pay his or her bills in absolute terms, the previously announced FICO 9 (FICO 9 is the classification of a collection account on the credit report) quantifies the degree of severity that different types of debt have on a consumer’s payment history.

This new classification puts medical debt that has been sent to collection–which consumers can unexpectedly incur after an illness, or even erroneously–in a different credit level so that it will have a lower impact on a consumer’s score and make it commensurate with the associated credit risk for the lender. The new scoring will also affect those consumers who have limited credit history, also known as “thin files,” and will allow the lenders to better assess their credit risk as well.

FICO has also stated that any medical collection account that has already been paid will in the future not be counted towards configuring a consumer’s credit scoring. Any unpaid medical bills from non-collections agencies will still be calculated, but to a lower degree than the credit scoring model that has been used in the past.

Although this new credit model was announced last week, the actual completion of upgrading the software changing the credit scoring of consumers’ credit scores may not be seen for several more months until it has been fully streamlined into all the credit companies’ systems. Ï–

Anessa Cohen lives in Cedarhurst and is a licensed real-estate broker and a licensed N.Y.S. mortgage broker with over 20 years of experience, offering full-service residential and commercial real-estate services (Anessa V Cohen Realty) and mortgaging services (First Meridian Mortgage) in the Five Towns and throughout the tri-state area. She can be reached at 516-569-5007 or via her website, Readers are encouraged to send questions or comments to

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