Due to some unfortunate circumstances, my credit score dropped 300 points in less than a year.
I had a procedure done at the local hospital, which ended up costing around $800. I gave them my insurance information (I was dually covered by my work, as well as my parents) and was done with it. A couple of months later, I get a letter from collections saying I owed them the $800. Confused, I called the hospital and asked them what had happened, and they replied that one of the insurances didn't go through. I asked them to read the number to me, and the last couple of digits were transposed. I told them the correct information, but they said there was nothing they could do about it because it was no longer under their control for billing, and I'd have to speak to the collection agency.
I called them, and they said the only thing they could do is process payments from me. This started a back-and-forth with me, the agency, and the hospital to get it resolved (the hospital acknowledged it was their mistake in data entry). This continued for several months. The $800 is now suddenly not reported on my credit report, so the hospital and agency may have worked it out (I just found this out today). My credit score however is still around what it was previously.
Viewing my credit score on Credit Karma results in recommendations of getting a small loan and then paying on it to increase my credit score. I have a couple of questions about this.
- Would applying for a loan in this manner and paying it off really increase my credit score?
- If I were to get the loan (say, $1000.00), could I simply make monthly payments, primarily with the money from the loan, and pay the interest with the money I make at work?
- If this is a viable option, what should the repayment plan be to maximize the impact on my credit score?