One of New York’s Commercial Debt Collection Agencies Discusses New Changes in Credit Scoring

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Following reports of the rollout of VantageScore Solutions’ new policy of ignoring paid collections on credit reports, the CEO of Rapid Recovery Solution discusses the potential impact of the change in scoring with respect to FICO scores remaining the preferred score generator in the industry.

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The FICO algorithm still considers all but very insignificant collections debts, and is unable to distinguish between paid and unpaid debts at this time...

On May 10, 2013, John Monderine, CEO of one of New York’s leading commercial debt collection agencies, responds to the emergence of credit scores that do not factor in collections debts that have been paid.

A recent article from the New York Times points out that credit scores “try to capture your financial behavior and distill that identity into one all-powerful number,” but says that typically “that figure doesn’t differentiate between [people] whose credit suffered for an innocuous reason, and consumers who can’t keep up with their credit card payments after a wild shopping spree at Best Buy.”

The article reports that VantageScore Solutions, a major credit card score generator, “has decided to ignore collection actions on credit reports – more than half of which are typically tied to medical debts – as long as the collections are paid.” The decision is a strategic one rather that a sympathetic one, says the article – VantageScore’s research found that “paid collections are less accurate at predicting future defaults than looking at unpaid collections in combination with a variety of other factors, like the age of consumers’ accounts and the size of their loans.”

The findings dovetail with the reintroduction of legislation to Congress this year that would require “consumer reporting agencies to remove fully paid or settled medical debt information from consumers’ credit reports within 45 days of the debt’s resolution.”

John Monderine, CEO of Rapid Recovery Solution, one of Long Island’s commercial debt collection agencies, says that the effect of the VantageScore’s new scoring will be difficult to predict, since the FICO score is still the dominant score generator in the industry. “The FICO algorithm still considers all but very insignificant collections debts, and is unable to distinguish between paid and unpaid debts at this time. Maybe VantageScore’s reforms will prompt them to reassess. Although this will help out the several million people with paid collections debts and innocuous score reports, the systemic problems that cause tens of millions of people to be unable to pay their debts in the first place – especially medical debt – needs to be addressed.”

Founded in 2006, Rapid Recovery Solution, Inc. is headquartered at the highest point of beautiful Long Island. Rapid Recovery Collection Agency is committed to recovering your funds. We believe that every debtor has the ability to pay if motivated correctly. We DO NOT alienate the debtors; we attempt to align with them and offer a number of ways to resolve not only your debt but also all their debts.

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