Paying for IVF with Bad Credit: Two Approval Strategies

Paying for In Vitro Fertilization (IVF) or any other infertility treatment with bad credit will not be easy. Couples need strategies to find financing.

Finance companies often reject consumers with a record of missed payments in their credit reports. Opting for lenders that value income over credit history can be beneficial.

The possible loan amounts are enormous. The average IVF cycle costs $15,000, and most couples undergo two to three cycles before conception takes place.

Lowering the borrowed sum increases the chance of loan approval. Using Flexible Spending Accounts, medical insurance, free treatment, or 401(k) plans can help reduce overall expenses.

Choosing Specialty Lenders

Couples with poor credit can improve their chances of getting IVF loans by selecting finance companies that cater to those with credit scores under 670.

Unsecured Loans

Many couples choose unsecured loans to pay for IVF since they don’t require home equity as collateral. However, patients with bad credit have a smaller chance of loan approval.

Increase your chance of approval by using a strategy with two key steps.

  1. Choose lenders prioritizing income and employment over credit scores.
  2. Use an online network to expose your profile to many sub-prime lenders.

Online Networks

Using an online network increases the likelihood of getting approved for unsecured loans. Couples with poor credit have a better chance of getting a personal loan when multiple lenders, who focus on income and job status, review their profile.

You only need to submit your information once. Many subprime lenders, focusing on clients with credit scores under 670, will review your information.

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If you get a personal loan, you can choose a fertility clinic with the highest success rate instead of one with payment plans.

Payment Plans

Relying on fertility clinic payment plans may not be the best approach to fund IVF. Most clinics direct couples to a few patient financing companies that prefer working with consumers with credit scores over 640.

Requesting payment plans directly at your fertility clinic could lower your approval odds, as it limits the number of lenders who see your profile, and most patient finance companies tend to favor applicants with higher credit scores.

Why risk an avoidable hard inquiry that drops your credit score further?

Secured Financing

Homeowners with poor credit may find getting approved for IVF financing easier by taking out secured loans, as lenders are more comfortable when there’s collateral to cover potential losses.

Equity Loans

Many couples may qualify for home equity loans to pay for IVF treatments. Lenders might say yes to borrowers with credit scores around 620 for home equity loans because they can take the property if payments are delinquent.

Choose from three options:

  1. Cash-out-refinancing: get a new mortgage for more than you currently owe on your house.
  2. Home equity loan: borrowers use the equity of their home as collateral.
  3. Home Equity Line of Credit: flexible revolving arrangement with your home as security, where you can borrow up to a set limit during an agreed-upon time.

Equity Agreements

Home equity agreements offer a non-loan option for many couples to finance IVF treatments. Instead of traditional lenders, investors give upfront cash to homeowners with credit scores over 500.

In a home equity agreement, you get cash now from your home equity and agree to pay back more when you sell your home later.

Home equity agreements can be more budget-friendly initially because there are no monthly payments. Study home equity agreements closely to grasp what they mean for your future finances before you agree to one.

Reducing the Amount Financed

Borrowing less money can help patients with bad credit get approved for IVF financing. Lenders often say yes to smaller loans for couples with poor credit.

Flexible Spending

Using a Healthcare Flexible Spending Account (HCFSA) can lower the amount you need to borrow for IVF, helping couples with low credit scores get a loan.

An HCFSA can give you money for medical costs upfront, often with more benefits than a standard loan. However, it’s important to note that an HCFSA is not financing.

You can choose this option if you have an HCFSA available through your employer. To pay for a portion of your IVF costs using an HCFSA, follow these steps:

1. Maximize Your Contribution:

   – During your employer’s annual open enrollment period, elect to contribute the maximum amount to your HCFSA.

     – For an individual employee, the limit is $3,200.

     – You can contribute up to $6,400 combined if both partners are eligible.

2. Plan Your IVF Cycle:

   – Schedule your IVF cycle to start early in the HCFSA plan year, which often begins in January.

3. Use HCFSA Funds:

   – Pay for your treatment at the fertility clinic using the HCFSA debit card provided by your employer.

4. Pay Providers Promptly:

   – Your employer must immediately reimburse providers for any eligible expenses, even if you haven’t yet contributed the total amount to your HCFSA.

5. Spread Out Contributions:

   – Your HCFSA contributions are taken out of your paycheck before taxes throughout the year, gradually reducing your take-home pay.

6. Save on Taxes:

   – By using pre-tax dollars from your HCFSA for IVF expenses, you lower your taxable income, potentially saving on:

     – Federal income tax

     – State income tax (if applicable)

     – FICA payroll tax (Social Security and Medicare)

An HCFSA has many advantages over financing. It guarantees approval without a credit check, has no interest, and offers significant tax savings.

Medical Insurance

You’ll need to borrow much less if your medical plan pays for treatments. Couples with low credit scores can take smaller loans for costs not paid by insurance, such as deductibles, coinsurance, and copays.

Changing jobs could help you find a health plan that covers IVF. Employer-based group health plans often cover IVF, mainly for two reasons:

  1. Firms want skilled workers and may offer IVF benefits voluntarily.
  2. Often, state laws make big companies include IVF in their health plans.

Even if your state lacks a mandate, you still have options. If a state has a mandate, group plans issued in that state must follow the requirements nationwide.

Big companies based in a state with an IVF mandate may provide this benefit across the country.

Therefore, large employers headquartered in one of the eight mandate states might offer health insurance covering IVF nationwide. Seek out firms based in these states for IVF insurance coverage.

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Free Treatment

Getting free treatment can cut IVF costs. Smaller financing amounts may make getting a loan easier. Many couples struggling with infertility end up with bad credit due to unpaid medical bills.

IVF grants from charitable foundations are rare as more people need them than funds are available. However, couples with compelling stories of financial hardship have an advantage. They are more likely to be chosen for a grant.

401K Loan

Taking money from a 401(k) can reduce the amount financed. Couples with low credit scores may tap into their 401(k) for IVF funds, allowing them to request smaller loans to handle the remaining costs.

  • You can take a hardship withdrawal from your 401(k) if you face a significant, urgent financial need and can’t borrow the money. However, you must pay income tax on the money you take out, which might jeopardize your comfort during retirement.
  • A 401(k) loan lets you borrow half of your vested balance but no more than $50,000. You must repay the 401(k) loan in five years. You must repay the loan in 60 days if you leave your job. If not, you’ll face a 10% penalty and owe income tax.