Journal of Credit Risk

Are all collections equal? The case of medical debt

Kenneth P. Brevoort and Michelle Kambara

  • Credit scoring models that do not distinguish between types of third-party collections overly penalize the scores of consumers with medical collection accounts. The credit performance of such consumers is consistent with that of consumers whose scores are 8-11 points higher.
  • Not distinguishing between paid and unpaid medical collections overly penalizes the scores of consumers with paid medical collections. The credit performance of these consumers is consistent with that of consumers whose scores are 15-22 points higher


Bills for unreimbursed medical care may be reported to national credit reporting agencies by third-party debt collectors. The use of this information in credit scoring models, which have not traditionally distinguished collection accounts for medical bills from other collection accounts, has been controversial because of the unique characteristics of medical debt. This paper explores the predictive value of medical collections in the context of a credit scoring model. We find that medical collections are less predictive of future credit performance than nonmedical collections. We also find that medical collections that have been paid in full are less predictive than those that remain unpaid. These results suggest that the practice of treating all collections the same over-penalizes the credit scores of consumers with medical collections and reduces the predictiveness of credit scoring models.

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