Important update:
The announced change to VantageScore models 3.0 and 4.0 to eliminate all medical collection data from the calculation of a consumer’s credit score is now anticipated to be implemented at the end of January 2023 by all three credit reporting companies.
VantageScore has made the decision that neither of its most recently introduced scoring models (VantageScore 3.0 and 4.0) will continue to use medical debt collection data in the calculation of consumers’ credit scores, regardless of the amount owed or the age of the collection. What does that mean for the consumers and lenders our organization serves?
- CONSUMER IMPACT: VantageScore estimates consumers with this type of information in their credit files will likely see scores increase by as much as 20 points when either the VantageScore 3.0 or 4.0 models are used.
- MINIMAL PERFORMANCE IMPACT: Impact to the VantageScore models’ predictive performance is expected to be minimal for a large segment of the population and both VantageScore 3.0 and 4.0 will continue to rank order effectively.
VantageScore expects the adjustment to the models will be completed and operational by mid-October of this year. According to a Consumer Financial Protection Bureau report released on March 1, 2022, medical collection accounts appear on 43 million credit reports and approximately 58% of bills that are in collections and on people’s credit records are medical bills as of the second quarter of 2021.
Having already eliminated medical collection accounts that have been paid off with the introduction of VantageScore 3.0. in 2013, VantageScore has been the leader in recognizing that medical debts and collections that have been paid off are not predictive of a consumer’s creditworthiness.
Now the organization is leading the way to more inclusion by eliminating medical collection data in determining credit scores. Read the white paper now.