Medical Collection!!! Should I pay before motgage application??

[cocomadd]

Hi all!

You guys rock!  Maybe someone out there can help me.  I have a collection on my credit for a 2011 medical bill for $2,995.  I need to know if I need to pay this before I apply for the loan, since paying it will refresh the bill and make my score go down.

HELP

[tooleman694]

wait till they ask for it to be paid.

[TropicalSerenade]

I agree, I have one that I didn't know about from 2010 on my CRs for $3,200. I was never asked about it and they didn't care about one medical collection. I have no late payments on any of my open TLs with an AAoA of 5.5 years so that's all they cared about. I'm closing in 2 weeks on a 30yr Conventional. 

[misscammiej]

I spoke to our loan processor on Monday, she was about to submit us to underwriting, but just wanted to touch base and let me know everything looked great. We have 2 collections for medical debts on our credit report $259 and $1116, from 2009. I asked her SPECIFICALLY will we need to pay those before we close. She said absolutley not, they dont care about medical debt. That was HER words! We are going through wells fargo! 

[p-]

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cocomadd wrote:  I have a collection on my credit for a 2011 medical bill for $2,995.  I need to know if I need to pay this before I apply for the loan, since paying it will refresh the bill and make my score go down.

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+1 on waiting until the LO says to pay.  But...  if you can get the OC to accept payment, and eliminate the CA altogether, it would be helpful.

[cocomadd]

Thank you all for your advice.  I spoke to the loan officer today and he said not to worry about the bill yet.  He said they may need me to pay it, but not to pay anything becuae the goal is to get the scores higher first to get the loan approved. He said, worst case scenario the pre-approval would be subject to me paying the bill.  So, I guess I will just save the money so if I need to pay it later I will.  I hope this experience will help someone out there in a similar circumstance.  NEVER PAY A COLLECTION WHEN ATTEMPTING TO GET MORTGAGE APPROVAL UNLESS YOU ARE IN NO RUSH AND HAVE THE TIME FOR SCORES TO GO UP AGAIN AFTER PAYMENT IS MADE.  PAYING AN OLD DEBT WILL REVIVE THE COLLECTION AND DECREASE YOUR SCORE.

[p-]

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cocomadd wrote:  NEVER PAY A COLLECTION WHEN ATTEMPTING TO GET MORTGAGE APPROVAL UNLESS YOU ARE IN NO RUSH AND HAVE THE TIME FOR SCORES TO GO UP AGAIN AFTER PAYMENT IS MADE.  PAYING AN OLD DEBT WILL REVIVE THE COLLECTION AND DECREASE YOUR SCORE.

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I'm sorry, where did you hear that paying a collection would decrease your score?  That is not correct.  There is no such thing as "reviving" a collection.  It is based on DOFD, or Date of First Delinquency, and status.  The DOFD doesn't change if you pay it off.  And the status will change from unpaid to paid, which is better.  The only reason I say wait to pay is if cash is tight.  

If you have the money to pay it off, contact the original creditor and see if they will accept payment.  Then you have a chance of eliminating the Collection.  Alternatively, negotiate a PFD with the Collection Agency, which will result in deletion.

Most important is DON'T dispute it, and DON'T sign anything the CA gives you, like a payment agreement, or confession of judgement.

No offense to your loan officer, but they are usually mortgage experts, not credit experts.  Invite him or her to jump in here, the community would be happy to answer questions.