People with unpaid medical bills, or debts that were paid off after going into collections, could find it easier to get a loan or a lower interest rate following a change in the way some credit scores are calculated.
FICO, a private company that develops the credit scores used in most lending decisions, said it concluded the changes would result in more accurate decisions about loan risks. For many consumers, the changes should mean higher credit scores.
“These enhancements help lenders because they result in greater precision,” a FICO statement said. “At the same time, the median FICO Score for consumers whose only major derogatory references are unpaid medical debts is expected to increase by 25 points.”
“That’s great news,” said Dorothea Bernique, director of the nonprofit Increasing Hope Financial Training Center in North Charleston. “That 25 points can make the difference between qualifying or not.”
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