Home Buying in Katy>Question Details

ashgal85, Home Buyer in Katy, TX

What if something hits my credit while in underwriting?

Asked by ashgal85, Katy, TX Thu Mar 7, 2013

I am currently in underwriting, I just got a call yesterday about a collection bill from 2008, it is a medical bill. I paid it yesterday because I do not want it to hit my credit report. What happens if it does hit my credit report while in under writing?

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This actually happened to me back in 2000. I was buying my first home. Two days before closing they re-pulled my credit and a medical collection for $500 showed up. I was never contacted about this amount that was owed and I never received a bill or invoice. When the lender re-pulled my credit my score dropped 100 points from the high 700's to the high 600's.

I immediately paid the collection and for some reason it did not effect my loan pricing like it may have today. I was also able to eventually have the collection company remove the collection from my credit history but that was not an easy task.

Many lenders today are now required to re-pull credit just before closing to verify if you have opened any new debt so it is possible that it could show up. I think in your case it probably will not but you will want to look at your credit and monitor it.

A free way to do this is at the website http://www.AnnualCreditReport.com (not Free Credit Report.com). This site is run by the 3 major credit bureaus and you can pull your credit for free once a year from each bureau. Also http://www.CreditKarma.com is a good site. That site is run by TransUnion (one of the 3 credit bureaus) and you can pull your TransUnion score anytime for free. The pulls do not count as inquiries either. You can also receive notifications if collections or inquiries show up on your report with that site as well.

Hope this helps.

Don Groff
REALTOR® | Mortgage Broker
Austin Real Estate Pros | 360 Lending Group
o 512.669.5599 m 512.633.4157
listings@dongroff.com | http://www.AustinListed.com
0 votes Thank Flag Link Fri Mar 8, 2013
Just speak with your lender, and provide lender the proof that you paid the bill.
0 votes Thank Flag Link Fri Mar 8, 2013
It's amazing how common this really is. In your case, a medical should have little or no impact on your ability to get a loan unless your credit scores were in the neighborhood of 620 or so. Obviously a new collection that appears on a consumer's credit report will have a credit score impact, but that too can be worked through by negotiating a payoff in order to receive a "Deletion Letter" then in turn having the Loan Officer do a Correction/Rapid Re-Score.

Try not to stress yourself out, like anything in life that comes your way, do what is necessary to correct the problem so you can move past it. BTW, the debt does appear to outside the Statute of Limitation for the State of Texas. You could also take that course of action with your Loan Officer. Hopefully they understand the Texas Civil Codes and consumer protections with regards to uncorrectable debts.

Best of Luck!
0 votes Thank Flag Link Fri Mar 8, 2013
If it is outside the allowabkle dates of collection for your state, you may have just added it to your credit when it may not have been enforceable. Collectors often will get an alert someone is buying a hoem or car and then try to collect because they can pressure them when the debt is too old to collect in many states. You should have asked your buyer agent before doing anything. and YES they do check your credit again usually right up to they give clear to close and fund the loan.
0 votes Thank Flag Link Fri Mar 8, 2013
Inform your loan officer and it will be OK if you are not on border line credit score.
It should not hit the report if you paid it.

As it is 2008 it should have already been on the report by now... NO sweat.

Good Luck.

Kadibhai (Kadi)
Better Homes & Gardens Gary Greene, Realtor Katy/Houston
Phone: 832-228-7978
Fax: 281-646 1841
Email: kadi.kadibhai@garygreene.com
Web: http://www.har.com/kadi
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0 votes Thank Flag Link Fri Mar 8, 2013
Don't sweat it. You paid it and you should be fine. Many times they do not pull the credit again
0 votes Thank Flag Link Fri Mar 8, 2013
Do not put anything on credit during the purchase of a home it can cause MAJOR problems. Underwritting can kick it out and deny the loan at last second. Good luck!
0 votes Thank Flag Link Fri Mar 8, 2013
Good morning, Contact your loan officer and inform them of the situation.
"Selling Real Estate Since 2001"
Best Regards,
Richard Luebeck
Elite Texas Properties
12320 Barker Cypress Road
Suite 600-224
Cypress TX 77429
Cell 832-646-2886
0 votes Thank Flag Link Fri Mar 8, 2013
My home is a new construction, and they told me that my credit pull is good for 120 days(which will be about 4 or 5 weeks after closing), so even if something hits my credit, how likely will they even know about it?
0 votes Thank Flag Link Thu Mar 7, 2013
If this hits your credit while your loan is in underwritting and your on the border of approval it can cause major problems. Also if you are on the border of a rate difference, the rate can change if your score is lowered.

We just had a client in our office that had a collection bill hit, bringing her score from 640 (the mininum for a conventional loan) to 632 and as a result she is not currently able to get the loan. She paid the collection bill that same day but it did not matter. We are currently having her debt paid down to change the score for the next month cycle.

So long story short, if you are on the border, it can be bad, if you aren't it shouldn't be too bad; all depends on your credit score. Let me know if you have any further questions. Good luck!
0 votes Thank Flag Link Thu Mar 7, 2013
Ask your loan officer. They are on your side.

If you paid it, they have no motivation to put it on the report.... So that is unlikely.

Good luck
Let us know how it works out!!
0 votes Thank Flag Link Thu Mar 7, 2013
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