Debtors in Kentucky may benefit from recent changes made to how medical debts will effect consumers’ credit scores in the future. During August 2014, Fair Isaac Corp., better known as FICO, announced its plans to mitigate the impact medical debt has been having on its credit score algorithm. The changes are expected to raise credit scores by 25 points for those consumers whose ratings have been adversely impacted by outstanding medical expenses.

The impact of unpaid medical debt on the credit score will be lessened, while debts that have already been paid will not be affected. According to the director of public relations at FICO, the organization has noticed that people with medical debt are no less likely to pay off their other debt than the average consumer. Decreasing the impact of unpaid medical bills that are in collection may help improve the changes of someone getting a loan who is otherwise qualified as a good credit risk.

Medical bills currently account for about 50 percent of all consumer debt in collections. The new changes will reflect a division between non-medical and medical debt, something consumers have long been clamoring for. A large number of people are struggling to pay their outstanding medical bills. Unpaid medical expenses are currently the primary cause for Americans filing for bankruptcy. Experian claims that more than 64 million credit reports in the country have records of medical collection.

People who are struggling with repaying debt might consider conferring with a bankruptcy lawyer who can be effective in helping a client understand and prepare for the bankruptcy proceeding. The attorney may be able to protect the client from wage garnishment or creditor harassment.

Source: Forbes, “Medical Debts Will Soon Weigh Less On Your Credit Score, But They’re Still A Problem“, Christina LaMontagne, August 26, 2014