NEW YORK (CNNMoney) 
 
 If you have loads of medical debt in collections, you could see your credit score go up soon. 
 
 FICO, the nation's top credit score provider, is introducing a new scoring model this fall where medical debt in collections will have less of an impact on a consumer's credit score than it currently does. 
 
 The median FICO score for people who have only unpaid medical debt on their report will jump by about 25 points, the company said Thursday. 
 
 Related: 1 in 3 adults have debt in collections 
 
 "This underscores that medical obligations are very different than any other kind of obligations because consumers don't choose to incur hospital debt -- it's a very different type of risk posed by a consumer when they default on that type of debt," said John Ulzheimer, expert at CreditSesame.com. 
 
 The change means that many consumers drowning in medical bills they can't pay will look less risky to lenders -- and will likely be able to qualify for better rates and deals. 
 
 But if you have other kinds of unpaid debt in addition to medical debt, you will likely see a smaller increase in your score -- if any at all. 
 
 Related: Credit card issuers urged to provide free credit scores 
 
 "It's going to be either neutral or helpful to everyone," said Ulzheimer. 
 
 Another change to the way it calculates scores: FICO will begin ignoring debt in collections that has been completely paid off or settled. Currently, debts that go into collections, even if they are paid off, are factored into all credit scores for up to seven years. 
 
 This is a move VantageScore, the scoring model created by credit bureaus Experian (EXPGF), Equifax (EFX) and TransUnion -- announced last year. ||||| FICO introduced its new FICO Score 9 as a way to assess consumer collection information, bypassing paid collection agency accounts and differentiating between medical and non-medical collection agency accounts. 
 
 The latest product ensures that medical collections have a lower impact on the score, commensurate with the credit risk they represent. 
 
 As a result, median FICO scores for consumers whose only major black marks are unpaid medical debts are expected to increase by 25 points. 
 
 In addition, FICO says the update is more predictive of a consumer's likelihood to repay a debt than previous versions, capturing recent consumer behavior to give lenders better risk assessments across the credit lifecycle and all credit products. 
 
 But the new technology doesn’t come without scrutiny from its competitor VantageScore. 
 
 “FICO’s announcement appears to be a competitive response to the traction that VantageScore 3.0 has garnered amongst the largest lenders in the country, and changes to the new FICO model apparently try to remedy many lender and consumer challenges already addressed by VantageScore,” Barrett Burns, president and CEO of VantageScore Solutions. 
 
 “The real test of a model’s capability is how it performs on each lender’s unique portfolio, and we challenge every lender to test any model they are using, and any other models available to them, against VantageScore 3.0 to be sure they are employing the best model for their business strategy,” Burns added. 
 
 VantageScore came into fruition by the three national bureaus Experian, TransUnion and Equifax, in rebuttal to FICO. And the two have been in conflict since. 
 
 Back in March, VantageScore released VantageScore 3.0, which wields similar characteristics to FICO Score 9. 
 
 “The VantageScore 3.0 model provides risk managers a level of predictiveness that will allow them to confidently extend credit to tens of millions of consumers that were previously invisible to them so that those consumers have a greater chance to access mainstream credit, which is one of our principle goals,” Burns said. 
 
 In response, Anthony Sprauve, senior consumer credit specialist with FICO, said, "Vantage Score 3.0 only addresses paid collections, which only account for 10% of collections reported to the three national credit bureaus. What FICO announced today is a new refined treatment of unpaid collections – medical and non-medical – that differentiates unpaid medical from unpaid non-medical collection agency accounts." 
 
 "This ensures that unpaid medical collections have a lower impact on the FICO Score, commensurate with the credit risk they represent. These enhancements result in greater precision," he continued. ||||| March 9 New York Attorney General Eric Schneiderman reached a settlement with the three biggest U.S. credit-reporting agencies in a deal that will change the way they handle errors and treat medical debt. 
 
 Under the agreement, set to be announced on Monday, Equifax Information Services LLC, Experian Information Solutions Inc and TransUnion LLC, will be more proactive in resolving disputes over information contained in their reports. 
 
 The three credit-reporting agencies (CRAs) collect and provide credit information on more than 200 million consumers in the United States. 
 
 Credit reports provided by the CRAs are used to assign numerical ratings called "credit scores," which help lenders determine whether they should grant loans to consumers and at what interest rates. 
 
 According to the deal, medical debts will not be put on consumers' credit reports until after a 180-day "waiting period" to allow insurance payments to be taken into account. In addition, all medical debts will be removed from a consumer's credit report after the debt is paid by insurance. 
 
 The settlement also requires the CRAs to institute several reforms over the next three years, including giving consumers the right to challenge inaccurate information in their credit reports by initiating a dispute. 
 
 In disputes, the CRAs will be required to use trained employees to review all supporting documents submitted by consumers who see an error in their files. 
 
 "The nation's largest reporting agencies have a responsibility to investigate and correct errors on consumers' credit reports. This agreement will reform the entire industry and provide vital protections for millions of consumers across the country," Schneiderman said. 
 
 The three companies launched a plan on Monday and said the implementation will begin over the next few months. 
 
 "The National Consumer Assistance Plan...will enhance our ability to offer accurate reports and make the process of dealing with credit information easier and more transparent for consumers," Stuart Pratt, chief executive of the Consumer Data Industry Association, the trade association that represents the three CRAs, said in a statement. 
 
 The agreement follows several efforts to make consumers more creditworthy. Last August, personal credit score provider FICO said it would leave out or discount medical debt from its scores, which would boost the credit record of many borrowers, while helping lenders to better assess risk. 
 
 (Reporting by Shivam Srivastava in Bengaluru and Karen Freifeld in New York; Editing by Anupama Dwivedi) ||||| A change in how the most widely used credit score in the U.S. is tallied will likely make it easier for tens of millions of Americans to get loans. 
 
 Fair Isaac Corp. said Thursday that it will stop including in its FICO credit-score calculations any record of a consumer failing to pay a bill if the bill has been paid or settled with a collection agency. The San Jose, Calif., company also will give less weight to unpaid medical bills...
– A modification to how one of the most common credit scores is calculated will mean better credit ratings for many Americans, reports the Wall Street Journal. Fair Isaac Corp. said yesterday that it won't place as much emphasis on medical debt when calculating consumers' FICO scores and will turn a blind eye to other debts that have been paid or settled through a collection agency. The new scoring system, which will be in place this fall, follows negotiations with the Consumer Financial Protection Bureau on ways to boost consumer lending. According to a Commonwealth Fund report cited in the Journal, 41% of US adults had a hard time coming up with funds to pay medical bills in 2012. Those who only have medical debt on their credit report could see an instant 25-point jump in their FICO score, according to CNN. The changes also mean that people who pay off their debts in collections won't be stuck with a seven-year black mark on their report like they have been. VantageScore—which manages the popular scoring model created by the Experian, TransUnion, and Equifax credit bureaus—says FICO's move is "a competitive response" to similar score-boosting changes it made last year, notes Housing Wire.