[TN] Medical Collections Account - Recent

[Anonymous]

Hello,

recently I had a $60 medical debt go onto my collections for a bill where I had moved addresses and never received the bill so didn't know to pay it...I've contacted the hospital and collections and they are saying there is no way it can be permanently removed but it can be marked as paid in full. My main concern and questions are how long is this collections account going to affect me and stay on my credit score, and will it affect future car loans and renting credit scores?

I have a consultation with a collections lawyer on Thursday for $50...But is it even worth going to the lawyer if it cannot be removed from my score?

Thanks for your help!

[Anonymous]

Are you planning to buy a house in the next couple years?  That collection will damage the score that mortgage lenders currently use. (Mortgage lenders have been forced to use a very old FICO model for the several years.  In that old model a small paid collection still hurts you.)

If you think you will buy a house but not for at least another 4-5 years, then I think you can have confidence that lenders will eventually be using much more recent models.

In FICO 8 (used by most lenders and CC issuers now, except for mortgages) a paid collection for < $100 has zero affect on your FICO score.

In FICO 9 (which lenders will probably start using more in the next year or two) a paid collection of ANY magnitude has zero affect on your FICO score.

Depending on your answers to the questions about your mortgage plans, you may decide to just pay it and forget about it.

Otherwise there are still things that can be done -- and what the hospital told you is not accurate.  The collection can be deleted, though it requires work on your end and negotiation and is not a certain deal even then.

[Anonymous]

OP, I don't think that you actually clarified in your post if you in fact did pay the bill yet or not.  If you did, you would need to write GW letters in an attempt to get them to remove the late payment.  Depending on the institution, this can be successful on the on the first try or could go unsuccessful from many tries over many months.

If you did NOT pay the bill yet, you can negotiate a pay for delete, or PFD.  Basically you tell them that you'll pay them in full if they agree to remove the negative reported information.  Once they provide you with something in writing stating this, you pay it off and then in theory they delete what they said they would.

[Anonymous]

Thanks for your reply and useful scoring information! Unfortunately I am not 100% if I will / will not be buying a house in the next 4-5 years, however, I will say with my SO salary after I graduate it is very possible we will be getting a house within that time frame.

[Anonymous]

Sorry I had forgot to clarify! I initially called and set up a payment but upon reading several threads and articles I froze my credit card and cancelled the card so it wouldn't go through since I read paying it off doesn't remove the infraction...I was awaiting more advice before I called again.

[Anonymous]

So basically you can (1) go the pay for delete route, or you can (2) pay it and move on;  Pros and cons to both.

(1) Pay for delete.  PRO:  If you succeed, the collection will be off your report for good.  CON: You'll need to research how to do this, make calls, write letters, etc. all of which take time; and there is no guarantee it will work.

(2) Pay it and move on.  PRO: No FICO impact for most lenders,  If you don't buy a house in the next three years you are probably fine there too.  This approach is quick and you are done.  CON: the collection does stay on your report.  I can see why you don't like this!

If you want to explore #1 further, Brutal Body Shots can likely point you in the right direction.  I think there are lots of PFD resources.