The next time subprime consumers show up at your dealership or their loan application arrives at your finance company’s underwriting department, their FICO score might be higher if much of what triggered their soft credit profile is delinquent medical debt.

FICO recently announced that the new FICO Score 9 introduces a more nuanced way to assess consumer collection information, bypassing paid collection agency accounts and offering a sophisticated treatment differentiating medical from non-medical collection agency accounts.

Officials explained this enhancement will help ensure that medical collections have a lower impact on the score, commensurate with the credit risk they represent.

FICO insisted these enhancements help finance companies because they result in greater precision.

At the same time, the company pointed out the median FICO score for consumers whose only major derogatory references are unpaid medical debts is expected to increase by 25 points.

FICO highlighted that it used sophisticated modeling techniques to make the new FICO Score 9 more predictive of a consumer’s likelihood to repay a debt than previous versions. This latest version of the FICO Score — the industry-standard measure of U.S. consumer credit risk — can capture recent consumer behavior to give finance companies better risk assessments across the credit lifecycle and all credit products.

The company said FICO Score 9 will be available to finance companies through the U.S. credit reporting agencies starting this fall.

FICO Score 9 also can supports the desire of finance companies to better assess the risk of consumers with limited credit history — so-called thin files.

In the model development process, FICO data scientists represented a consumer’s repayment behavior in degrees of risk. For example, instead of classifying a consumer as someone who paid or didn’t pay her bills in absolute terms, the various degrees of the consumer’s payment history have been quantified.

The end result is a score with an improved ability to assess the risk of thin files, according to FICO.

“FICO Score 9 uses a more refined treatment of consumers with a limited credit history and those with accounts at collection agencies, so that lenders can grow their credit and loan portfolios more confidently,” said Jim Wehmann, executive vice president for scores at FICO.

“By applying innovative predictive modeling techniques on recent data to capture consumer credit behavior, FICO Score 9 will extend FICO’s leadership in providing the credit score that most accurately and fairly defines U.S. consumer credit risk,” Wehmann continued.

FICO Score 9 can assess consumer credit risk on all credit product lines — mortgages, auto loans, credit cards and personal loans — and can be used across the entire customer credit lifecycle, starting with marketing/pre-screen, originations and account management, all the way through early-stage collections.

Wehmann mentioned FICO’s innovative, multi-faceted modeling approach can incorporate a more exhaustive characteristic selection process to build a score that is even more effective across a wide variety of situations. He added this approach also uses the Multiple Goal Scorecard technology of FICO Model Builder, which balances a traditional risk metric evaluating all accounts with one evaluating originations risk across all product lines, such as mortgages, credit cards or auto loans.

Wehmann went on to stress FICO Score 9 will also be the most consistent FICO score across all three credit bureaus. This generation of the FICO score uses the same development window across the three different credit bureaus to generate scores that will be as consistent as possible.

“The advances in FICO Score 9 provide significant incentives for lenders to upgrade from earlier versions of the FICO Score,” Wehmann said.

“U.S. lenders can more consistently and precisely assess new applicants and existing accounts with a more robust credit score built on the most current credit data available, while minimizing operational hurdles associated with adoption and compliance. We stand ready to help lenders make that upgrade as smoothly and quickly as possible,” he went on to say.

Wehmann also pointed out future scores in the FICO Score suite will build on FICO’s deep expertise in analyzing a broad spectrum of data types, as well as its keen understanding of client needs and consumer behavior. These scores will be developed to reliably assess the creditworthiness of even more people.

FICO noted 90 percent of all U.S. consumer lending decisions use the FICO score as 25 of the largest credit card issuers, 25 of the largest auto finance companies and tens of thousands of other businesses rely on the FICO score for consumer credit risk analysis and federal regulatory compliance.