Should I pay my collections account?

I have a medical collections account on my credit report that has been there since Jan of this year (2008). They have been reporting it every month as Key Derogatory (I have no idea what that means).

....... Well anyways, I do want to pay the collection, but I don't want it to further damage my credit score. I've been reading a lot of stuff online, that state paying it will make it current and can lower your score even more initially.

My husband and I are about to apply for a home loan. I want to improve my score before we apply, not lower it.

Should I pay it now or wait?
Additional Details
I want to pay it! I just don't know if paying it now will decrease my score. I don't want to decrease my score because I'm trying to get a home loan right now.

More specifically my question is, Should I pay the collections account now, or wait until after we secure the home loan.

Negotiate a delete for pay settlement -- you pay $x and they remove the item from your credit. That will help your score. If you just pay it, the dergoatory item will stay for 7-1/2 years.

Get this and any other derogatory items settled before you apply for that mortgage. Mortgage companies will require you to settle any derogatory before approving you.

First thing to know is "where you insured" at the time. If you did have medical insurance then read the following:

Most consumers don't realize it, but a common practice, known as balance billing, often is illegal. When doctors or hospitals think an insurer has reimbursed too little, state and federal laws generally bar the medical providers from pressuring patients to pay the difference. Instead, doctors and hospitals should be wrangling directly with insurers.

Balance billing most frequently occurs when medical providers participating in a managed-care network believe the plan's insurer is imposing too deep a discount on medical bills or is taking too long to pay. California, New Jersey and 45 other states ban in-network providers from billing insured patients beyond co-payments or co-insurance required by the plan. Similarly, federal law prohibits providers from billing Medicare patients for unpaid balances.
These laws require medical providers to seek payment only from the insurer for services covered by the plan. Many states also shield insured patients from balance billing by out-of-network hospitals and doctors in emergencies, since patients usually don't control who treats them in those situations. (Bans on balance billing generally don't apply when a patient gets an elective procedure, such as cosmetic surgery, or seeks out-of-network, non-emergency service without a referral.)

SOURCE: Business Week, Aug 28, 2008

If you were insured and want to fight it, here is how:
Appeal a denial of insurance. If your insurer denies a benefit, find out why it didn't pay for it and appeal the decision if you think the company is wrong. The denial letter should state a specific reason why you were turned down. If the internal appeals process doesn't work, take your complaint to your state Office of Insurance Commissioner, which acts as a mediator between you and your insurer.

Negotiate with your health care provider. Ask for long-term payment plans or a reduced fee, especially if you're uninsured. Ask about payment plans, but get the plan in writing and make sure that you can reasonably make those payments, Cohen said. "Medical bills are negotiable," Cohen said. "You can call up your provider, ask for charity care, financial assistance, or ask for discounts on your bill. They may be willing to offer discounts in the hope that you'll pay a certain percentage."

As to your question about paying it, well it has allready been reported so the damage has been done. Paying it will improve your chances of geting a mortgage because most lenders ignore paid collections. Unpaid one will hurt you. But note, if you are going to dipsute the debt, then the CRA's will flag the debt as in dispute for the time being.

If the debt is a large one and you were not insured, then the mortgage broker might want this paid before it winds up being a judgment which stays on your report as follows: Lawsuits And Judgements - Seven years or until the governing statute of limitations has expired, whichever is longer. (some states the statute is 20 years and renewable if not paid.)http://www.bcsalliance.com/y_debt_statelaws.html

If this debt is from a long time ago and is now showing as a collections account, check your state SOL on collecting a debt, It may be "time barred" and they can not seek legal action to collect.
Use the above link to find your states SOL.

Hope this answer is of help to you
LEGAL DISCLAIMER: The answer provided here is intended for informational purposes only. It is not intended nor presumed to be legal counsel or professional legal advice

You should pay now but wait to buy a home until you have this problem resolved completely.

Pay it off now, but make sure they remove the negative information from your credit report.

The answer is ALWAYS get it paid, and make sure that the negative information is removed before going after a loan like a mortgage. Paying these types of things off ALWAYS helps.

Pay it off Think that when your credit is viewed its not just your score its how you have handled or managed your debts or current accounts ... CREDIT .. is really the credibility of the person are they honest or not & if its a medical bill more than likely loan officer would understand that it was health issues that hindered you from paying asap but sees on your report that you paid your responsibility .. .. GOOD LUCK wish you the best

Since this collection is so new, I doubt that paying it will do much to your credit score. Paying OLD collections is what will hurt you the most.

As far a your mortgage application, banks will sometimes overlook medical bills under a certain amount. My husband had numerous medical collections on his report when we purchased our home and the bank still approved us. I don't know if this will apply in your situation.

Talk to a mortgage broker and ask them to pull your credit. A good one will tell you what she thinks about your credit or your changes of getting approved.

This is a good question. MSN has an excellent article on this very subject.
http://articles.moneycentral.msn.com/Banking/YourCreditRating/WhenPayingBillsCanHurtYourCredit.aspx

you should call the doctor or collection agency. they will usually work out a payment plan with you. as long as it shows that you are trying to pay it off it usually will not go against you. don't wait. it's already been on there too long. why mess things up for the future?

creditors DO look at medical bills and utilities. paying those bills late can mess your credit up just as bad as mortgage and credit card bills that are paid late.

Nah, just wait 7 years and get it charged off. No one looks at medical debt anyway.

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