VantageScore, a provider of credit scores to lenders, has reportedly decided to drop medical debt from its calculations – a move that could raise many consumers’ credit scores.
The Wall Street Journal reports that the company’s move goes farther than those recently announced by Equifax, Experian, and Transunion – the three credit reporting agencies that jointly own VantageScore.
In March, the three credit reporting agencies announced that medical debt turned over to collections but later repaid will be removed from a consumer’s credit report. Under current practices, it remains as part of a consumer’s credit history.
The Journal reports that VantageScore is taking it a step further. The company will remove all medical collections from the data used to determine a credit score. Company executives told the Journal that it has found medical debts are not a good indicator of how consumers handle other debts.
Medical debt often can’t be avoided
According to the Kaiser Family Foundation, two-thirds of medical debts are the result of a one-time or short-term medical expense arising from an emergency or sudden medical need. After two years of the COVID-19 pandemic and a detailed review of the prevalence of medical collection debt on credit reports, all of the credit reporting agencies are now changing the way they view medical debt.
“Especially given the impact that Covid-19 had on consumers, having medical debt isn’t necessarily reflective of someone’s ability to pay back a loan,” VantageScore CEO Silvio Tavares told the news outlet.
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This article was originally published on ConsumerAffairs.com on August 11, 2022.