Financing in Los Angeles>Question Details

Claudia1981, Home Buyer in Los Angeles, CA

Been pre-qualified but now will have a collection on my account for old medical bill how will this affect me?

Asked by Claudia1981, Los Angeles, CA Fri Jun 19, 2009

I was in a car accident in 2004 and my settlement money was stolen so I have a judgment against the person that cashed it but I have been unable to collect so my medical bill is outstanding I dont feel I should pay for it , but if this is going to affect the chances of me getting a home than I will have to suck it up and pay over $3600. My credit score is 644 and was qualified for an fha loan if this collection gets on my record will it drop my score under the necesary credit score to be approved?
Please advise I was given 2 weeks to pay or will go onto record.

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Darrell Evans’ answer
You should check with your lender to see if the collection with affect your loan. In some cases, we do have discretion to leave "medical collections" open. Depending on the circumstances, we've allowed home buyers to leave medical collections open. If the collection does hit your credit your fico score could drop from 20-50 points and "yes" that could disqualify you from the loan. Here's a suggestion: The advice I give clients about settling debts is to 1. have the collection company verify the amount before you pay (often times), they've added additional charges that may have been over and above the bill (depending on how old the collection is)...2. ask that they provide you a settlement agreement before you pay evidencing that the amount you're going to pay will close the account....3. keep a copy of the canceled check once you've paid just in case it ends up on your credit. These items will help your lender get your credit report re-scored quickly if needed. Good luck!
1 vote Thank Flag Link Fri Jun 19, 2009
Hi Claudia,

My advises would be, yes, pay.

With interest rates being so low, 1. you are making an excellent decision to buy. 2. You are getting the lower rate than if your collection was already lowering the fico score and you would get a substantially higher interest rate.

With property values lower than usual, it is like you are buying a savings account for the future when prices rise up again. You will make more money than the $3600. Besides, you may still get this money back from the person who stole it.

You can only win. I am glad you are buying in this great buyer's market.

1 vote Thank Flag Link Fri Jun 19, 2009
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