Credit Score in 14057>Question Details

Buyerineden, Home Buyer in Eden, NY

Should I pay off debt or wait?

Asked by Buyerineden, Eden, NY Tue Jun 21, 2011

I was preapproved for a mortgage with a score of 620 and it has dropped since due to a medical bill in collections should I pay the bill and ask for it to be removed from my credit report or wait till after I buy the house?

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My understanding from lenders is if you pay them down to 50% or below and continue payment every month this will increase your credit score quickly. BUT...I would talk with you lender before doing anything.
0 votes Thank Flag Link Tue Jun 21, 2011
Hey Buyerineden,

I would talk to your Loan/Mortgage Officer as to the best way to proceed, and possible effect on your pre-approval letter.

good luck
0 votes Thank Flag Link Tue Jun 21, 2011
Not certain but your FICO score may drop and not allow you to get a commitment letter. Pay off the debt if you can but the process may be lengthy
0 votes Thank Flag Link Tue Jun 21, 2011
Collections have a major impact on credit scores and usually mean that you pay a higher rate on your mortgage & credit cards than people with better scores. Where are you in the buying process right now? If you are already ready to close on a property, you will not have enough time to get the collection off your report before you close. If on the other hand you are not in contract, then make the effort to pay the bill & get it off your report so that you are ready to go when the proper property comes up.
0 votes Thank Flag Link Tue Jun 21, 2011
One way to address your medical debt is through the HIPAA letter process, that stands for Health Insurance Portability and Accountability Act of 1996 (HIPAA). It is a 100% legal way to remove medical collections from your credit report as you are using U.S. Law as your basis to remove them.

It requires you have knowledge of the HIPAA law as well as FCRA (Fair Credit Reporting Act), and be ready to write some letters and take action. It can be a bit tough to do that research on your own, so a very nice person, named "WhyChat", decided to take it upon themselves and compile all of the information that is needed on a website at - including the legal basis (violations can be pursued by the state attorney general's with annual per violation fines up to $1,500,000 - talk about motivation to comply with the law), step-by-step instructions, links to attorney's opinions and even sample letters for you to copy/use on your own. This process has a very high success rate. I've seen over 15 medical collections deleted from someone's report that way, scores increased over 110 points.

When you are dealing with medical collections, being familiar with HIPAA & FCRA is like going into battle with a bazooka when the collection agencies have a butter knife.
0 votes Thank Flag Link Tue Jun 21, 2011
Pay asap. It usually takes 30 days for things to come off of your credit report.
0 votes Thank Flag Link Tue Jun 21, 2011
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