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?

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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.

You should read our blog article for more information on qualifying for a mortgage.

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What is the difference between a settle the collection and a charge-off?"

stepha1 at 8:04 am Jul 30

Reply

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



What is the average minimal score most mortgage companies/banks work with to get a home loan?"

Jecqua at 11:36 am Jul 29

Reply

These days it is about 720-740 to qualify for a conventional mortgage at a good rate.

CK Moderator

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