If paying off collection accounts wont raise my credit score should I even bother paying them?
March 17th, 2010 by admin
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9 Responses to “If paying off collection accounts wont raise my credit score should I even bother paying them?”
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If you cant afford to pay off old bills dont even bother with a mortgage.
This will be up to your lender to decide, some require all collection accounts to be paid and some do not.
As far as paying them is concerned, unless you can get a “pay for delete” agreement where they remove the accounts from your credit bureau in return for you paying them, then your right, there is no reason to pay them.
They will drop off on their own after 7-years from the date of first delinquency.
visit daveramsey.com to learn the hard lessons coming ur way from others mistakes.
when u ‘need ‘ to buy anything ‘fast’ u are guaranteed to get messed up’.
slow down, keep renting until u understand what u are doing.
get a ‘house buying for dummies’ and read it.
no.waste of time.
I was in the mortgage industry for a number of years and now do nothing but real estate. Most important, have a mortgage consultant review your report and determine items in collection, if any, to be paid. Consult a mortgage broker versus a bank. Why? Mortgage brokers with your circumstance traditionally have more lenders to shop and should be able to get your best rates.
Homes loans with the collapse of the sub-prime market have become more difficult to obtain, but possible, at 620. Other determining factors or ratios are considered as well, i.e., debt-to-income, employment, Federal Tax filings, etc. A mortgage broker will meet with you and discuss your options. They can also direct you in improving your credit.
Most first time home buyers don’t think about the costs to do the loan, i.e., closing costs, taxes due, homeowners insurance payable at closing, etc. Many entities come into play but can be negotiated.
Around the North Atlanta area builders are struggling. Stop by a new subdivision in your area and talk to them as well. You may find a home and home loan made possible with the builder’s lenders.
Hope this info is helpful and good luck. It is wonderful to have a home you own.
The longer you let these accounts sit the harder it will be to get the loan your trying for trust me I know from experience. I paid all of mine off and now my credit is pretty good. unfortunately it does take some time. when you pay one off request the company to remove it from your report. this will help.
Skip dealing with the collection agencies and pay the companies directly. The companies would rather get the money from you than the collection agencies anyway. As far as the downpayment goes, use it to pay off what you owe before you buy a house.
I don’t think you will be able to get a house if you have unresolved debt on your score. It would be best to pay off your debt and that way you can get that monkey off your back.
Before making this decision, talk to a lender and do your best to get pre-qualified. This decision will come up then and you know exactly where you stand. You also don’t say how long that they have been in your reports, but negative items should drop off in 7 years.
In my experience after ID theft and bankruptcy, an option for you for a mortgage company would be Option One by H&R Block mortgage, but I got an ARM at a low interest rate for the first two years, but I’m expected to fight it out to get my score up before I got refinanced at the 2 year period.
However, I had a ton of errors in my reports that I challenged and disputed, so I got all but one of them off and still got my score up from 486 to 730 in a little over a year, so it’s worth the effort to fight back if you find items in your credit report that shouldn’t be there.
Go to my website and read it all because I’m sure you would find it useful. I’ll post a link to annual credit report here too!
Tips, if the accounts have been sold to a collection agency, the original debtor will not be able to negotiate a settlement with you! If it is recommended you pay off the debt, get a delete from credit report agreement in writing!!!!