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Looking to buy a home with a bill in collections. Should this be paid off first?
I have a bill in collections and I am looking to purhase a home in about 2 1/2 years from now, is it better to pay off this debt or not?
Asked by
JDiGorio
1 year ago
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What is the average minimal score most mortgage companies/banks work with to get a home loan?
Jecqua 1 year ago
These days it is about 720-740 to qualify for a conventional mortgage at a good rate.
CK Moderator
What is the difference between a settle the collection and a charge-off?
stepha1 1 year ago
Charge-off is debt that a lender writes off basically saying they have given-up on collecting the debt.
Settled collections is debt that is collected from the collections agency. Charge-off is the worst for lenders and your credit.CK Moderator
CK Monitor wrote: Charge-off is debt that a lender writes off basically saying they have given-up on collecting the debt. Settled collections is debt that is collected from the collections agency. Charge-off is the worst for lenders and your credit.
I'm now asking: a collection that falls off your report after 7 years - is that then considered a Charge Off? It's 3 years from disappearing (falling off) - if I pay it now then I have a derogatory late payment that will show for 7+ years won't I? Am I in jeopardy of having a charge-off (worse negative to your report than having a collection)? The amount is only $74
boofus 4 months ago
This is getting very specific and the results will vary by creditor so I will only speak in generalities. In the short term, your score MIGHT see a dip from the updated collections account however, long-term you are probably better off paying the $74.
CK Moderator
You should take care of the collections account now rather than later. It is in your best interest that you settle the collection instead of being charged-off. The further away you can place yourself from any derogatory information on your credit report, the better. If you are planning on buying a home in several years, and depending on where your credit score is now, you will need to allocate adequate time to increase your scores to meet today's more stringent mortgage qualifications.
JRobertLaw 2 months ago
Lenders are much more discerning when looking at applications. To get the best rate, you should make sure your credit is pristine.
hardeight 2 months ago
How do you raise your number? I have a very low score and im trying to move it to thge 700 so we can buy our home. I have a 730 something for payments made on time but I have a 500 soemthing overall because of an old credit card that we never paid and it went to collection. We are trying to may it off now and will have it paid off buy the end of the month!!! I know this will still stay on our credit but will it make my credit score number go up at all if it is fully paid off? Thanks for your help!
folts10 2 months ago