If you have collection accounts on your credit that has been paid, but they are still harming your credit score, you may be about to get a boost to your credit score, thanks to a company called FICO.

FICO (previously known as Fair Isaac Corporation) the company that developed the FICO score, issued a Press Release on August 9, 2014. Their new credit scoring formula or algorithm will not count collection accounts that have been paid. This is a help to consumers, who up to now, if they paid a collection account, could suffer a temporary reduction in their score because paying the account created a more recent date of last activity.

The Press Release also says that medical collections will not count as much as they did before against your credit score. Again, this should be a big help to over-burdened consumers. Many people, particularly those with health or medical problems, can't pay all their medical bills.

Many times after a chapter 13 case is completed and discharged, and I am helping a debtor clean up their credit reports, they have medical collections that have happened after the bankruptcy is filed. There has not been much that I can do for them up to now, but from now on, those should not count as much against their credit. And if they can pay them, they may not affect their credit score at all. At least that's what I'm led to believe by the FICO Press Release.

Do you think this is a good thing? Or do you think FICO should leave their score alone, and let people bear the full consequences of their actions? We appreciate your comments!

J Thomas Black
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Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization
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