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Member Since: December 2015
unless you've negotiated a pay for removal, they will stay for 7 years. the only way to remove is to dispute it's validity, or the company can have it removed like i said if you've negotiated that. paying something off will not automatically delete it from your credit report.
you might want to try and call the collection agencies, ask them since you've paid them off, will they "lose" your information. if they don't have your information on file any more, when you go to dispute it, the credit agency will be forced to remove it because the collection agencies will not have in their files....
pennstate04's response was:
filing for BK when you own a home can be tricky. whatever you do, if you want to keep your home, keep making payments! and get an attorney is good advice. you'll need one for a BK anyway.
after they report them as such. typically 30-60 days.
most mortgages require all collections to be paid in full prior to closing.
this is the way all installments loans are amortized. part of the payment goes toward principal, part toward interest. in the beginning part of the loan, most of the payment goes toward interest, and only a small amount toward principal. to say after two years it's ALL interest cannot be true. are you still paying interest after two years (say on a five year loan), yes, of course. you'll pay interest until the last payment, but you also pay principal on the first payment, albeit a small amount.
pennstate04's reply was:
paying CC's off will usually help your score, paying off collections may actually hurt your score initially. i know it sounds counter-intuitive, but if the collection is a couple years old, when you pay it off they update the reporting date. now you have a paid in full collection that is recent, which can hurt your score. now, if you get an agreement for pay to remove, then it's a whole different ball game. if you get that agreement, then the collection will be deleted from your report, like it never happened! this could have a HUGE impact on your credit. some companies will not do pay to removes, they have agreements that do not allow them to do it. also, something to keep in mind the new FICO 8 models ignore colections under 100 dollars, and the new vantage 3.0 models ignore paid collections, and unpaid collection under 250$.
sounds like you've done a little homework, so good. fico 8 ignores collections under 100$, so if you have small ones they aren't hurting you if a lender uses that model. most mortgage companies use models older than fico 8, so in your case, this might not be of benefit to you. you mention equifax and transunion because CK uses those two, but there is a third agency, experian. most likely they also have accounts reported to them. these are three seperate agencies who collection information on all of us. their information could be same, could be different. not all creditors report to all three, some just to one etc.
you are correct in saying that just paying these things off won't help you right away. it will probably hurt you. you have to negotiate a pay for delete. this is done in writing and they will delete the account and then it's as if it never happened. this is really the only way to boost your scores right away by paying off the collections. if you do get them to pay for delete, they will report it to all agencies, so you're good there. if you get all the accounts deleted, your scores will jump up right away! as long as it take them to report it, 30-60 days. the only faster way is the dispute process, but since they are your legitimate debts, i don't see a dispute working (disputes can be settled in just a few business days most times, and your score could jump in a week!).
in the meantime, i would open more credit. get it joint, in both your names, and then it will report as such on both you and your husbands reports. i'd aim higher than 200, it's not uncommon to get 5K + credit limits with income of 40K. with both your incomes a 5K credit limit is reasonable. cap one is known as kind of subprime credit card issuier, so you might want to try them.
a question for you, if your husbands scores are better, does he earn enough to qualify for the home himself? if so, it may be an option to leave you off of the mortgage. you can still be on the deed, but if your scores hurt the application and you don't need your income to qualify, having the loan in his name may be a way to get it approved. mortgage companies usually require payment of all collections prior to closing, but wait! you're better off getting qualified, then settling the debts at the closing table, if you can get qualified. if you pay them early you run the risk of hurting your credit as you've already learned.
how to deal with credi cards: keep an eye on your monthly statement end date. the balance at the end of that statement is the amount they report. i like to pay mine off before the end of the statement date, that way they report a zero balanace, with a postiive payment history. this is the best of both worlds. if you let your credit card get jacked up with a high balance, it will hurt your credit.
in the eyes of the mortgage company, you haven't tied up your credit, you've tied up your income! because now this loan you cosigned for shows on your credit report as YOURS. they will count it in your debt to income ratio, unless you can prove someone else is making the payments. if you can provide six months canceled checks showing someone else is paying, you *might be able to get away with taking it out of your DTI. but like johnny said above, you are putting your credit at risk by cosigning.
it could potentionally start before. the rule is 7 years but it's really 7 years and six months, from the first day of deliquency, which actually occurs before the collection agency ever got your account. the extra six months is given for collection processing times.
do you know anyone that has an already established credit card? parents, brothers, sisters? an easy way to get instant scores is to be added as an authorized user on one of their accounts. all of the history of their account will instantly be yours. that being said, being added to one that has a long history, low or zero balanace, and good pay history will give you good credit scores. usually takes about a month for them to report it.
otherwise, a secured card might be your only option. unsecured cards are more favorable, sometimes a local bank or credit union will take a chance on someone with zero credit, if you have an account with them already etc.