topic Re: FICO Score 9 Introduces Refined Analysis of Medical Collections in Credit in the News

FICO Score 9 Introduces Refined Analysis of Medical Collections

-Wade- — Fri, 08 Aug 2014 01:02:06 GMT

http://www.marketwatch.com/story/fico-score-9-introduces-refined-analysis-of-medical-collections-2014-08-07

Re: FICO Score 9 Introduces Refined Analysis of Medical Collections

pizzadude — Fri, 08 Aug 2014 03:26:06 GMT

Very interesting ~ especially this " the median FICO Score for consumers whose only major derogatory references are unpaid medical debts is expected to increase by 25 points"

Unfortunately it may be a while before lenders adopt FICO 9, so we'll have to wait and see....

Re: FICO Score 9 Introduces Refined Analysis of Medical Collections

Revelate — Fri, 08 Aug 2014 04:26:08 GMT

@pizzadude wrote:

Very interesting ~ especially this " the median FICO Score for consumers whose only major derogatory references are unpaid medical debts is expected to increase by 25 points"

Unfortunately it may be a while before lenders adopt FICO 9, so we'll have to wait and see....

I actually think we'll see the major credit card lenders being evaluating it near immediately.

My own experience: no lender has ever cared about a paid collection on my reports, some have cared when my collection was open. We also seem to anecdotally know that medical collections don't carry the same weight as other collection types for lenders.

Fact is, these changes are what the banks have been doing for the past several years, and if they can integrate that more comprehensively into their underwriting standards, I suspect they'll be all over it. Like anything they'll need to run it against their own data and likely concurrently for a while, but wouldn't surprise me at all to find the major lenders all moving to it... and it's more compelling for the smaller lenders too I suspect than the FICO '04 to FICO 8 transition was.

Still going to be stuck on the mortgage side, unfortunately for the same tired old reasons.

Re: FICO Score 9 Introduces Refined Analysis of Medical Collections

Transmogrifying_Bee — Fri, 08 Aug 2014 23:48:34 GMT

Wade, THANKS for posting this article!

Re: FICO Score 9 Introduces Refined Analysis of Medical Collections

-Wade- — Sat, 09 Aug 2014 05:05:06 GMT

@Transmogrifying_Bee wrote:
Wade, THANKS for posting this article!

Your welcome it will sure help a lot of people when it rolls out and lenders start useing it

Re: FICO Score 9 Introduces Refined Analysis of Medical Collections

Trapper123 — Tue, 12 Aug 2014 16:22:07 GMT

Do you think settled for less than full amount taglines would be considered "paid collections" so that they would disappear?

Re: FICO Score 9 Introduces Refined Analysis of Medical Collections

cashnocredit — Tue, 12 Aug 2014 20:36:37 GMT

@Trapper123 wrote:
Do you think settled for less than full amount taglines would be considered "paid collections" so that they would disappear?

Settled accounts are bypassed in FICO 09 as well.

However, paid collections are still shown on your credit reports. They just won't affect FICO 09 scores.

Re: FICO Score 9 Introduces Refined Analysis of Medical Collections

cashnocredit — Tue, 12 Aug 2014 20:45:57 GMT

@Revelate wrote:
@pizzadude wrote:

Very interesting ~ especially this " the median FICO Score for consumers whose only major derogatory references are unpaid medical debts is expected to increase by 25 points"

Unfortunately it may be a while before lenders adopt FICO 9, so we'll have to wait and see....
I actually think we'll see the major credit card lenders being evaluating it near immediately.

My own experience: no lender has ever cared about a paid collection on my reports, some have cared when my collection was open. We also seem to anecdotally know that medical collections don't carry the same weight as other collection types for lenders.

Fact is, these changes are what the banks have been doing for the past several years, and if they can integrate that more comprehensively into their underwriting standards, I suspect they'll be all over it. Like anything they'll need to run it against their own data and likely concurrently for a while, but wouldn't surprise me at all to find the major lenders all moving to it... and it's more compelling for the smaller lenders too I suspect than the FICO '04 to FICO 8 transition was.

Still going to be stuck on the mortgage side, unfortunately for the same tired old reasons.

I think this is right, especially after the CFPB's report on medical collections unfairly impacting current scores. This also opens up many more potential customers to lenders without increased risk. There might even be enough pressure to upgrade for the GSEs that still mandate FICO 04 on most mortgage underwriting. That will probably take longer given how entrenched FICO 04 is and they would have to validate new models to long term mortgage loans. That's no easy or short task.

Re: FICO Score 9 Introduces Refined Analysis of Medical Collections

printosaur — Tue, 26 Aug 2014 16:05:46 GMT

One wrinkle on FICO 9 -- scores for people whose debts in collection are mostly non-medical will go down.

Fair isaac confirmed this, didn't say what the average decrease would be. Here is the news article:

http://www.creditcards.com/credit-card-news/fico-new-credit-score-formula-medical-1508.php

This makes sense in light of the CFPB analysis, which said that non-medical debts in collection were being under-penalized by FICO score, based on repayment history. This part of the report got fewer headlines than the over-penalization of medical debts, but it's in there, page 11:

http://files.consumerfinance.gov/f/201405_cfpb_report_data-point_medical-debt-credit-scores.pdf

Re: FICO Score 9 Introduces Refined Analysis of Medical Collections

Anonymous — Tue, 26 Aug 2014 17:36:01 GMT

Thanks for posting this article. I've been working hard to get my credit score up so I can get approved for a home loan. However, after having surgery in late April, the hospital sent me to collections without so much as a phone call even though I had been paying $50 - $75 every month...and they're still sending me bills. I'm hoping this FICO 9 is adopted by lenders. My heart sank because I've brought my score up from 509 (March) to 644 and I feel like it's just going to go right back down.

Re: FICO Score 9 Introduces Refined Analysis of Medical Collections

pizzadude — Sun, 14 Sep 2014 13:24:30 GMT

Interesting comments on the projected adoption of FICO9 by Mortgage Lenders:

"Although the jury is still out as to how many mortgage borrowers will benefit from FICO 9, the change is going to take a while before it starts to help. According to Tom Showalter, chief analytics officer at Digital Risk, a risk, compliance and transaction management company, it can take some time before mortgage lenders make changes since they are notoriously slow to adopt updates. “Fannie Mae and Freddie Mac are still on FICO 5 or 6,” says Showalter. “It may take about a year to test it and another year for the adoption period. If in 2016 we see aggressive uptake of FICO 9 that would be light speed.”

http://www.foxbusiness.com/personal-finance/2014/09/10/what-fico-new-credit-score-formula-means-for-home-buyers/

Re: FICO Score 9 Introduces Refined Analysis of Medical Collections

Anonymous — Thu, 02 Oct 2014 00:43:56 GMT

Don't say that. After trying to file an assault charge I got bad advice from the police officer and got screwed over by the state, and some doctors. The doctors said they would accept installments and passed it to Collections before the first payment.

Throughout this I was talking with 2 lawyers, the DA, at least 8 collectors and doctors offices, my bank, a property owner and renter without insurance trying to get all this figured out and paid for. I came out of it fairly well, only with the knowledge and tools I had to use. But everying finantially was ruined. I can still see a couple of those collections on my report, it's a painstaking reminder of what all happened.

Now I'm trying to rebuild my credit from 554, and trying to apply for credit card to avoid late fees on bills because my prior buffer was depleated and my credit cards were closed. I can't apply for a morgage and save based on average morgages around here about $200/month either until everything is cleaned up.

I might have shared too much but medical expenses can really destroy your budget briefly, but your credit for a long while.

Re: FICO Score 9 Introduces Refined Analysis of Medical Collections

Marcos8 — Sat, 18 Oct 2014 18:02:28 GMT

@cashnocredit wrote:
@Trapper123 wrote:
Do you think settled for less than full amount taglines would be considered "paid collections" so that they would disappear?
Settled accounts are bypassed in FICO 09 as well.

However, paid collections are still shown on your credit reports. They just won't affect FICO 09 scores.

I have never had any collections medical or otherwise. I did though have a short sale of my house that lists both the first and second mortgage as paid in full for less than full balance/charge off/settled. Will this new version of FICO supposedly help me or are these changes strictly related to other types of settled accounts that were in collections only? Thanks