FICO is an acronym for the Fair Isaac Company, but you knew that right?
FICO was an independent company a long time ago. They developed the mathematics that reduces us all to mere numbers. It doesn't sound wonderful does it?
Actually, being reduced to a number was a good thing. For the first time, that number translated into the realistic odds of you either making all your payments on time or defaulting on your loans.
A LITTLE HISTORY
This was powerful information for lenders. Instead of making long drawn out lending decisions based on lengthy financial statements, the lenders now had a streamlined process at hand.
The fine people at FICO had created a great product. In the greatest of capitalistic ways they sold the company to TRW (one of the three credit reporting bureaus). TRW then sold their newly bought product to the other credit bureaus (Equifax and Transunion), packaging them under slightly different names - The Beacon and Empirica Score.
When you have a good product the next thing to do is change it. Redefine and refine it. If the FICO score helped home lenders understand the chance of mortgage defaults, what about other lending institutions? How about the car guys? So FICO came out with something called the Auto FICO. This number predicts how well the auto loan (or lease) they make to you will perform.
The car guys liked it. They still like it. If you listen to the fast talking lawyers at the end of commercials you'll hear the words "Auto FICO".
Well FICO is at it again. This time they are going after the medical community. You are about to get your MedFICO Score. As you would guess, it hopes to better guess at how apt you are to pay your medical related bills.
Can you see it coming?
"Well Mr. Mueller, based on your MedFICO score we're going to treat your illness with an alternative therapy. We know your very ill but you just didn't qualify for our best therapy."
Does that make me a Sub Prime Patient?
Supposedly, hospitals will check the score, which will be based on the patient's medical bill payment history, only after the patient is discharged. Yeah right.
If almost 80% of credit reports have errors - I'm not so confident this is a good thing. I'm going to keep taking my vitamins.
This post brought to you courtesy of Mike Mueller.
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Mike, before real estate I worked in a hospital and I can tell you they have your financial history right in front of them AS you're being admitted. I don't believe they use FICO, but it's some sort of rating.
Unless you are in a true emergency if you have an outstanding charge to the hospital they won't admit you unless you pay in full BEFORE being treated.
I just wish they would use the same criteria for treating all the illegals we have in Texas who get free health care. I do't want to get started on THAT rant!
Mike... it doesn't surprise me... scary. I guess I will just forgo medical insurance then and tell them to put it on my 'fico card' lol