A few days ago, I did a radio interview with a nationally syndicated radio program. A question was asked about the impact as VantageScore would no longer count medical collections in their credit score. The hosts thought this would be a big change. To the surprise of the hosts, I told them, “It doesn’t matter.” Why?
Medical collections appear on roughly 10% of all credit reports and can drop a lender’s FICO score over a 100 points in no time and the damage can last for seven years until the medical collection drops off the credit report.
However, recent changes to medical collections have been made. When medical collections are paid, they are no longer reported on the credit report. Second, medical collections under $500 will no longer be reported on the credit reports. Finally, a medical collection will only report on a person’s credit after one year from the time of service.
The bigger issue is what lender uses the VanageScore for any loan approval?
Lots of crickets.
So why does it matter if VantageScore is no longer going to count medical collections if no lender utilizes them for loan approval? VantageScore first needs to be utilized for loan approval before it will have any importance to you as a consumer.
Until then, you don’t need to worry about any changes with your VantageScore.