Financing In Vitro Fertilization (IVF) or other infertility treatments can be challenging for couples with poor credit. They need to develop strategies to secure funding.
Finance companies frequently deny applications from individuals with a history of late payments reflected in their credit reports. Seeking lenders who prioritize income rather than credit history can be advantageous.
The potential loan amounts for IVF can be pretty significant, as an average IVF cycle costs around $15,000, and most couples may need to undergo two to three cycles before achieving pregnancy.
Reducing the amount borrowed can enhance the likelihood of loan approval. Utilizing Flexible Spending Accounts, medical insurance, complementary treatments, or tapping into 401(k) plans can help lower overall costs.
Selecting Specialized Lenders
Couples with low credit scores can improve their chances of obtaining IVF loans by choosing finance companies that specifically assist those with scores below 670.
Unsecured Loans
Many couples opt for unsecured loans for IVF since they do not require home equity as collateral. However, those with poor credit face lower approval odds.
To enhance approval chances, consider a two-step approach:
- Choose lenders focusing on income and employment rather than credit scores.
- Use an online network to present your profile to multiple sub-prime lenders.
Online Networks
Using an online network can increase the chances of securing unsecured loans. Couples with low credit scores are more likely to receive personal loans when their information is reviewed by various lenders emphasizing income and employment.
Submitting your information just once allows numerous subprime lenders, who cater to individuals with credit scores under 670, to evaluate your profile.
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With a personal loan, couples can select a fertility clinic known for its high success rates instead of being restricted to those offering payment plans.
Payment Plans
Relying solely on payment plans from fertility clinics may not be the best way to finance IVF. Most clinics tend to direct couples to a limited number of patient financing companies that prefer clients with credit scores above 640.
Requesting payment plans directly from your fertility clinic could diminish your chances of approval, as it narrows the pool of lenders reviewing your profile, and most patient financing companies favor applicants with higher credit scores.
Why risk a hard inquiry that could further harm your credit score?
Secured Financing
Homeowners with poor credit might find it easier to secure IVF financing through secured loans, as lenders feel more comfortable using collateral to mitigate potential losses.
Equity Loans
Many couples might qualify for home equity loans to fund IVF treatments. Lenders may approve borrowers with credit scores around 620 for home equity loans, as they can claim the property in case of missed payments.
Consider three options:
- Cash-out refinancing: obtain a new mortgage for more than your current home debt.
- Home equity loan: leverage your home equity as collateral.
- Home Equity Line of Credit: a flexible borrowing arrangement using your home as security, allowing you to borrow up to a specified limit within a set timeframe.
Equity Agreements
Home equity agreements present a non-loan alternative for couples seeking to finance IVF treatments. Instead of traditional loans, investors can provide upfront cash to homeowners with credit scores above 500.
In a home equity agreement, you receive immediate cash from your home equity and agree to repay more when you sell your home later.
These agreements can be more budget-friendly since they do not require monthly payments. Before committing, it’s crucial to thoroughly understand the implications of home equity agreements on your future finances.
Reducing the Financed Amount
Borrowing a smaller amount can facilitate loan approval for IVF financing for those with poor credit. Lenders are generally more inclined to approve smaller loan amounts for couples facing credit challenges.
- Smaller loans result in lower monthly payments and an improved debt-to-income ratio.
- Smaller loans mean lenders risk losing less money if borrowers default.
Flexible Spending
Utilizing a Healthcare Flexible Spending Account (HCFSA) can decrease the amount needed to borrow for IVF, making it easier for couples with low credit scores to secure loans.
An HCFSA provides upfront funds for medical expenses, often offering more advantages than a typical loan. However, it’s essential to recognize that an HCFSA is not a financing option.
If available through your employer, you can follow these steps to utilize it for IVF costs:
- Maximize Your Contribution: During your employer’s annual open enrollment, contribute the maximum to your HCFSA (up to $3,200 for individuals and $6,400 for couples).
- Plan Your IVF Cycle: Schedule your IVF cycle to commence early in the HCFSA plan year, typically starting in January.
- Use HCFSA Funds: Pay for treatments at the fertility clinic using the HCFSA debit card from your employer.
- Pay Providers Promptly: Your employer must immediately reimburse providers for eligible expenses, even if you haven’t fully contributed to your HCFSA.
- Spread Out Contributions: HCFSA contributions are deducted from your paycheck before taxes throughout the year, gradually lowering your take-home pay.
- Save on Taxes: Using pre-tax dollars from your HCFSA for IVF expenses reduces your taxable income, potentially saving you on federal and state income taxes and FICA payroll tax.
An HCFSA offers numerous benefits over financing, including guaranteed approval without a credit check, no interest charges, and significant tax savings.
Medical Insurance
If your health insurance covers treatments, you’ll need to borrow significantly less. Couples with low credit scores can take out smaller loans for expenses not covered by insurance, such as deductibles, coinsurance, and copays.
Changing jobs might help you find a health plan that includes IVF coverage. Employer-sponsored group health plans often provide IVF benefits for two main reasons:
- Companies aim to attract skilled employees and may voluntarily offer IVF benefits.
- State laws often require large companies to include IVF in their health plans.
Even if your state does not have a mandate, you still have options. If a state has a mandate, group plans issued must comply with requirements nationwide.
Therefore, large employers headquartered in states with IVF mandates may offer this benefit nationwide. Look for companies based in these states for potential IVF insurance coverage.
Free Treatment
Accessing free treatment can significantly reduce IVF costs. Financing smaller amounts may lead to easier loan approvals. Many couples dealing with infertility may find themselves with poor credit due to unpaid medical bills.
IVF grants from charitable organizations are limited, as demand often exceeds available funds. However, couples with compelling financial hardship stories may have a better chance of receiving a grant.
401(k) Loan
Utilizing funds from a 401(k) can decrease the amount you need to finance. Couples with low credit scores may access their 401(k) for IVF expenses, allowing them to seek smaller loans for remaining costs.
- A hardship withdrawal from your 401(k) is possible if you face a significant financial need and cannot secure a loan. However, you will owe income tax on the withdrawn amount, which could impact your retirement savings.
- A 401(k) loan allows you to borrow up to half of your vested balance, with a maximum of $50,000. You must repay the loan within a specified period to avoid a 10% penalty.
- Five years if you remain with the same employer.
- Sixty days if you leave your job.
