If we pay a medical bill in full that was sent to collections for only 2 months,

[Roger]

My wife and I are currently trying to buy a house. When our credit first got pulled her score was in the 680s. When the underwriters pulled it it dropped down to 613! It was a hospital collections for $1100.

It was on her report for maybe 2 months and we paid it in full to the hospital not the agency. We need her score to go back up to at least 640. Is this possible?

They said they can’t remove it off her report.

[Tracy Winters]

Unlikely, though you could try the good-will approach

I’ll try to make it as clear as I can, although you’re missing a crucial piece of information: You didn’t say who reported the account to your wife’s credit report? It can be the Hospital (not likely), the collection agency or both!

Usually, hospitals simply sell unpaid bills to collection agencies, which then become the owner of the debt. Usually they are the ones that report to the credit bureaus, and they are the entity you are supposed to pay to.

Once the unpaid bill is sold to collection, the hospital no longer owns it and should therefore refuse to accept your money. You must inquire about this, because, regardless to your question about the derogatory item and the credit score, you may find that you still owe money to the collection agency (as the legal owner of you debt) ALTHOGH you’ve paid the hospital (which should have rejected your payment).

Paying off debt in itself does nothing to improve your credit score. Your credit report will show that the debt is paid, and creditors can use it in your favor, but your credit score itself will remain unchanged. The only information that goes into the credit score formula is your credit history, so the fact that you had a collection account is not deleted when you pay off your debt!

In general, correctly reported negative information cannot be legally removed from your report. Most negative information remains on your report for 7-1/2 years, no matter what, and only the passage of time can remove it. There should have been no exceptions to this rule, but there are a few:

Pay For Delete
Collection agencies (or any other entity that reports to the credit bureaus) are not allowed to delete/remove information about certain accounts, even after they are paid.

Some collection agencies are willing to risk their relationships with the credit bureaus and will erase a collection account from customers’ reports if they’re willing to pay off their debt in full. It’s called a Pay for Delete Agreement.

In your case however, since the debt is already paid – this solution is N/A.

Goodwill Letters
Another approach is to write a letter to the debt owner, asking for his forgiveness and good will in removing the account from your credit report. This approach works well with companies you have long relationship such as utility providers, banks, cc companies, cell phone providers etc.

You can try this approach with a hospital, but not likely with a collection agency. Naturally, you must pay the debt in full BEFORE sending a good-will letter.

Add a consumer remark to your credit report
The last option available to you is to add a short explanation (a.k.a Consumer Statement) to your credit report, explaining all potential creditors why a certain derogatory item is on your credit report. It will do nothing to improve your credit score, but potential creditors that actually read your credit report (most do) DO take it into consideration. Credit score is important but is only one factor out of many in the lending decision.

See credit-repair-self-help.html and how-to-pay-off-debt.html for more information.

All the best.

[Author]

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