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FICO 9: Just What the Doctor Ordered?

FICO 9: Just What the Doctor Ordered?

By Lisa Weinberger • February 16, 2015

Injuries often happen in an instant, and illnesses can progress without much warning. These sudden healthcare emergencies and their subsequent recoveries could mean big medical bills, even for consumers with health insurance. For patients who can't pay, that medical debt becomes a hefty new line item on the balance sheet.

Medical debt is a threat to many consumers' financial health. One in four Americans reports having more medical debt than cash on hand, according to an August 2014 survey by Bankrate and Princeton Survey Research Associates International. Among those who earn less than $30,000 annually, 44 percent have more medical debt than savings, versus just 6 percent of those making $75,000 or more.

In some cases, patients may not even be aware that they owe their doctor, hospital, or healthcare provider.

All the while, unpaid medical debt can get reported to the credit bureaus the same way a missed payment on a mortgage or credit card would be—–creating a red flag on credit files and a drag on credit scores.

"This is a frustrating issue for consumers who otherwise have no credit issues, but discover medical debt in collections," says Gerri Detweiler, Director of Consumer Education at

The FICO score, the standard credit score in the U.S., used in 90 percent of all lending decisions, seeks to remedy this issue with its updated FICO Score 9, introduced this past summer. It promises a more nuanced way to tabulate consumer credit information, in part by distinguishing between medical and nonmedical debt in collections.

Seems logical, right? After all, people choose to obligate themselves to mortgages, car loans and credit cards, but rushing to the emergency room and racking up a big bill isn't as much of a choice.

"This will help ensure that medical collections have a lower impact on the score, commensurate with the credit risk they represent," FICO announced in a press release.

How much of an impact? FICO says that the median score for consumers whose only major negative credit references are medical collections could increase by as many as 25 points.

"The updated model gives consumers a better opportunity to resolve any issues," says Detweiler.

However, the conundrum for consumers is that, although FICO can prescribe its enhanced scoring model to lenders, there is no guarantee that lenders will actually take it. As with previous FICO scoring models, lenders are able to choose which version to use. Therefore, rather than serving as a quick cure-all for credit scores, FICO 9 may take a while before providing consumers some relief.

"The biggest issue is adoption. It takes lenders a while to adopt a new scoring model," says Detweiler. "They have to first test it in their own portfolios and monitor profitability, so it could take months or years to adopt, and they may not adopt it at all."


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