VantageScore Ignores Paid Collection Accounts

The NY Times reports that a major credit score generator, VantageScore Solutions, has decided to ignore collection actions on credit reports — many of which are medical debts — as long as the collections are paid.

Vantage found that paid collections are less accurate at predicting future defaults than looking at unpaid collections and other factors.

VantageScore’s findings lend support to proposed legislation that was reintroduced in Congress this year to require consumer reporting agencies to remove fully paid or settled medical debt information from consumers’ credit reports. That would help some of the estimated seven million people who reported that a billing error prompted a collection agency to contact them in 2012, according to on study.

The problem is that a paid, isolated collection account can have a significant impact on scores, which is unfair to consumers.

Whether the leading score model, FICO, will follow suit is unknown.

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