The Frugal Creditnista

Searching for a home & I have medical collections. Should I pay?

Q: I have a few medical collections that are reporting on my credit.

Should I pay them or leave them alone? I live in NC, which has a statute of limitations of 3 years, but I am looking to get approved for a home loan soon, and I don't want those to be a problem, they are 3.5yrs old.

A. It really depends. Since it is past your statute of limitations you don't have to worry about being sued for a judgement in order to pay it, BUT if they can make your overall credit profile look good (aka increase your credit scores) – and it doesn't cause a financial hardship, pay it.  Lenders for FHA financing ignore Medical Collections anyway.  I'd look at if they are currently reporting on your credit reports on a monthly basis, that makes a difference as well (explain this in my Fire Your Medical Collections course)

I actually have the most success with Pay/Settle for deletes with medical collections. Typically if you pay/settle the account with an agreement – Made BEFORE $$$ is submitted – they'll delete it. Now that will look good prior to getting approved.

I'd also look at everything else that is reporting – positive and negative – to ensure that everything is on the up and up – not too many addresses listed, low balances on all revolving accounts, etc.

Most loan officers will give you tips for improvement in order to correct be approved/improve your interest rate, ask smile emoticon. Good luck in your home search!

If you need assistance preparing for your home ownership journey, here's my Free Home Buying Challenge, Claim My Keys:  Claim My Keys Home Buying Challenge

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