Medical Collection and New Mortgage

Anonymous · ‎04-04-2015

I was hit with a $59 collection medical bill in April 2014. I paid it off in Aug'14. However it shows up on my EQ, EXP credit bureaus (but not on TU). My EQ Beacon FICO is 673 and EXP FICO Score 2 is 665. (TU > 750). Desperately trying to get one EXP, EQ above 700 so that I can qualify for a mortgage. (Jumbo Mortgage).

The problem is since I discovered the collection item in credit bureau I paid all my credit card bills to zero (>$15000 at one point), paid off a second mortgage on a condo property I own (about $65,000. I took this loan just before the above item was reported to the credit bureau). BUT, the EQ Beacon 5 and EXP FICO Score 2 stayed exactly the same. Did not move one bit - to the point I am questioning if myFICO scores are correct.

Feeling desperate and frustrated as no matter what I do I am unable to change this. I have been tracking them for 8 months now - paid a bunch of money to attorney who could not get the collection item removed. Further not sure when I will be able to qualify for a mortgage - 1 month, 6 months, 1 year or 2 years. Living in a small rented house (which is way smaller than what's needed and the family feels very frustrated).

Highly appreciate if somebody can provide clarity.

frugalQ · ‎04-04-2015

Have You tried personally appealing to the CA asking them to remove it? Also, you can go directly to the creditor and ask them to help you get it removed.

Also there is a hippa process that people have used to get collections removed. I have no idea what it is and don't know if it works on paid collections. You will have to google it to get the steps because I don't think it can be discussed in these forums.

Good luck.

Anonymous · ‎04-04-2015

I can't offer much other I feel your frustration. Somehow it doesn't seem fair a 59 dollar oversight can do so much damage. Credit stuff can be brutal at times.

Lemmus · ‎04-05-2015

...its the date of the dofd that is killing your scores ...I know its PIF and that you've tried to get it removed using the normal methods ...but have you considered offering the CA a flat out cash offer to remove it? ...use the pfd templates in the RebuildingCredit forum sticky but modify it to fit your offer ...what have you got to lose?

Anonymous · ‎04-06-2015

If it is the DOFD which is hurting me....how long till it hurts me....as of April this year it is exactly 1 year since the amount was reported by the CA. Will it continue to hurt for a while? if so long before I see any movement in Beacon 5 and FICO SCORE Version 2?

Lemmus · ‎04-06-2015

...a 6+ year old medical collection for $600 just fell off my EQ last week (very last neg) ...my EQ score jumped 70 points ...no other alerts and neither TU or EX moved since they didn't have it ...so yes, the hit can be serious, more so the newer the dofd is ...aging will take away a lot of the pain but as you can see, its still substantial ...by the way, Fico scores both paid and unpaid collection exactly the same ...crazy, eh ...hth

Anonymous · ‎04-07-2015

I finally had an unpaid $70 medical collection come off April 1st. My score has changed 3 points and that can be from anything. It led me to do a little bit of research and this is what I came across on a few different sites..

The FICO 2008 credit scoring formula, released in 2009, doesn’t include collection accounts under $100 in its calculations. Thus, a medical collection below the $100 mark will show up for lenders that review your actual report, but won’t impact your score. Like other collection accounts, small collection accounts are removed from your credit report after seven years.

I don't know how much it truly impacts scores. I just know when it came off, nothing changed score wise for me.

Lndsy747 · ‎04-07-2015

Did you pay your cards to $0 or leave a small amount report on one card? I've always seen in the forums that having 1 card reporting a balance less than 9% will give the best score results.

Lemmus · ‎04-07-2015

@Anonymous wrote:
I finally had an unpaid $70 medical collection come off April 1st. My score has changed 3 points and that can be from anything. It led me to do a little bit of research and this is what I came across on a few different sites..

The FICO 2008 credit scoring formula, released in 2009, doesn’t include collection accounts under $100 in its calculations. Thus, a medical collection below the $100 mark will show up for lenders that review your actual report, but won’t impact your score. Like other collection accounts, small collection accounts are removed from your credit report after seven years.

I don't know how much it truly impacts scores. I just know when it came off, nothing changed score wise for me.

...the problem of course is that the FICO 2008 credit scoring formula is not used by mortgage lenders ...Fannie Mae/Freddie Mac, the two huge govt mortgage guarantee backers that most lenders sell their mortgages to, only accept the older FICO 2004 credit scoring model which, afaik, does include all collection accounts ...but you'll only see your fico 4 mortgage scores if your lender pulls them or you buy a 3B report from myFico ...hth

Anonymous · ‎04-08-2015

Update...Experian FICO V2 score jumped from 665 to 677 when I paid off and closed a home equity loan of $65K that I opened in Sept 2014. Of course, the same thing had no impact on Equifax Beacon 5 (at 675 for the last 6 months). Again the original medical collection was reported in Aprl 2014 and paid off in August 2014. Can I expect that it crosses 700 by summer? Anything else I can do. I regulary use two credit cards Saphire Preferred and Amex SPG - altough there isnt much balance