Hi everyone Aaron Ninness here your mortgage Pro in Denver, Colorado with another installment of how much mortgage can I afford Today We're going to talk about medical collections And how that might impact your qualifications or things that it could affect on the mortgage process Before we dive in though just a friendly reminder that if you enjoy the content – give me a like make sure you subscribe Keep getting this free content delivered to you every week medical collections are one of those things that are popping up more and more the reality is that the billing is a Nightmare on the medical world a lot of times things get submitted they are "Miscoded" I guess would be a phrase that you see often In network out-of-network, whatever the case is but if you don't pay that medical bill it turns into a collection They sell it to a collector who tries to get the money from you now the issue becomes that You can rack up a sizable amount of collection debt Us as a lender doesn't care about that though medical collections are rarely rarely taken into account on your qualification even if it was $25,000 we understand that being healthy is a big part of paying bills and Medical collections rarely affect how an underwriter looks at a file even though
It's a debt truly Oh in fact even if it reports a payment we don't use those payments because it is a medical collection Now one of the points that you want to understand though Is that it does absolutely affect your credit score? And that's where I think We see the biggest complication One little $1800 medical collection is going to hurt your or negatively impact your credit score sometimes It's 20 points sometimes It's 200 depends how high your score is the higher your score the bigger the impact? That collection will have if you're already at a 600 score Since that's a lower side of the equation you may find that a medical collection doesn't actually hurt that much That's why there's a bit of a range now if you could get someone on the phone call the collector Find out why it went to this what the circumstance is you very well might be able to say look if I paid Excuse me if I pay that collection can I get that removed from my credit? Not just showed paid in full but actually removed And they would need to send you a physical letter in writing saying that they are going to get it removed If you can get them to work with you on that I absolutely think it's a good idea to pay the bill Otherwise whether that is open or closed paid off or showing a balance actually doesn't change your credit report at all It's one of the misnomers now I know legislation is changing out there where hopefully this is going to get fixed Talk of the town is that they actually have to wait six months I've tried to collect that debt before they actually can report it to collections, which would be a huge win Another thing that starts to happen though Is that collectors have the obligation or the right to sell that day again? So here you had an $18 debt with a collector They can't get it from you So they sell it to someone else and now it reports a new collection The problem is is that the law says that you should not have to open collections for the same debt But how it actually is reported to the bureau sometimes they never remove that collection and so now you have multiple Collections you can get those cleaned up and again get that score to start being positively impacted from that Okay, so keep in mind that medical collections are not count against you as far as the debt itself, but it can negatively Impact your score and there are some ways to get around that What everyone should avoid doing though is if you have a lot of medical debt? That's outstanding you do not want to have a credit repair company go in and dispute everything for you disputes can cause problems on a loan It's just a behind-the-scenes Guideline that when we see disputes we we have some issues with those So be wary of just paying someone who's going to contact the bureau's dispute all your medical collections as that still could actually make it Harder for you to get a loan Hopefully that answers some questions if you have had some medical collections You're wondering if you could get a loan as always if you like the information give me a like subscribe And we'll see on another episode of how much mortgage can I afford?