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i am trying to clean up my credit report and try to buy a house. I have a lot in collections from years ago when I was younger (and stupid). I have heard conflicting ideas on what to do. Some say that it won't do any good for your score to pay off collections, and others say it will. is it worth it to put in the money it will take to pay them all off? Will that help my credit score?

livinginnky · Posted: Tue Oct 16, 2007 2:12 pm Post subject:

You should get in touch with a good lender first and see what they say. The thing is it can be good and bad. It is definately good for the long term but can have a conflicting negative effect in the short run.

It is impossible to say what would be the best thing to do without seeing your credit. DO NOT POST IT HERE (no offense it's just some people might).

Now even if a lender doesn't require them to be paid to obtain a mortgage doesn't mean they should not be paid. It is up to everyone to decide if they should pay off their prior obligations or not. I personally think if it's yours, pay them. Just find out if you should do it before or after you get the loan.

Guest

I had a mortgage man that was referred to me run our credit, not a lender. Is a lendor going to want to run my credit again?

willisaddo · Posted: Tue Oct 16, 2007 9:18 pm Post subject:

Hi CB,
I would love to be of assistance to you. I would be able to point you in the right direction. My name is Will Addo. I am a mortgage consultant with Wells Fargo Home Mortgage here in Atlanta.

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi,

If you want to clear your credit report you should pay off the debts first; and then you can think about the home mortgage because the only way to improve your credit score is to clear your debt.

Thanks,
Larry

evolovik26 · Posted: Wed Oct 17, 2007 6:48 am Post subject:

ok buddy here is the deal listen to livinginky because he is actually knows what he is talking about
The wellsfargo guy is just selfpromoting and larry is giving you general info that is not always the answer.
Here is how this works on your collections. Whenever you pay on an account it registers as activity on your account. Which is good when bills are paid on time. When you have a collection on your account it is a negative activity on an unpaid account. But hte way collections work is they only affect your credit when they initially report on your credit. So whatever bad effects you whould have had from them you have already got them. Now there is a possibility that down the line the collection debt that you have will be repurchased by another collection agency and will be reported again on your credit. That means another hit. However with time these things affect your credt less and less that is why a 2 yr old collection is not a concern to most banks but its nice to not have it there. Now you have mentioned that you have had collections over a year ago that means that while its a good idea to payoff your debts if you do you will get a a fresh activity on a delinquent account which is bad. Once the collection is off your credit, your credit will improve over time. And it will show as paid on your report.
So now here are the things to concider.
1. Are you qualified for a loan right now?
You could very well be qualified for an FHA loan if the collections and bad credit are over a year old and you have a stable job history. You can even be qualified for a conventional loan depending on your score, income and asset qualifications.
2. When are you planning to buy a home?
If next couple of months then perhaps you should leave the collections till after you buy a home unless a lender requires you to pay off something at the closing. If you are buying in spring then its a good idea to get a copy of your credit report from your mortgage buddy and clean it up a bit.

3. Will improvement of your credit change things significantly for you. Now here is the deal if you qualify for an FHA loan then your score does not matter you get the same good rates no matter what. In order to get a better then FHA rates you need to qualify for a conforming loan, have a significant downpayment (20% is good), good credit as well. (680+) is good credit. Now if you dont qualify for FHA and you cant go conforming you stuck with almost nonexistent (today) subprime and this is tough.(downpayment will play a big role here and any bump to credit is a big plus but you still stuck with bad rates)

Make sure you mortgage buddy can do FHA (alot of brokers cant) and look for your best interests.
Also remember that when you buy a house you will want to have moneyin the bank. (the more the better) for miscaleneous costs and asset verification so dont go spend your last $$ clearing collections untill you know what it will do for you.

Guest

My name is Donna and I own a Correction company. Now from what I understand is that you have collections on your credit. If you want to pay your debt, that's great, but you shouldn't pay them through the collection agencies. Call the original grantor and ask to pay them off, if they are over a year old, they cannot accept a payment from you, because they have already received a tax write-off from the government because they lost money. Collection agencies do not buy your debt, they buy the information about your debt. The account number, name and amount, then they harrass you and threaten you to pay them. Unfortunately, it is not illegal for them to buy the information, fortunately, it is illegal for them to threaten or call during certain times. Collections can be removed from your credit report. They never look good, and they always cost you points. Now every month that you have them on their, it isn't going to drop your score, but getting them removed can increase your score. But paying off collections does not increase your score, it actually drops it, so not only do you have the original grantor reporting a negative item, but you also have the collection, and if you pay it, you would then have it listed again as a paid collection. So it isn't just affecting your score once, but twice. Also, after you pay it, it is harder to remove for companies like mine. If you need anyother help, feel free to email us. "dec_credit_corrections@yahoo.com". Hope I helped.

[Deactivate the email id as per forum rule]

Caron · Posted: Thu Nov 01, 2007 5:15 am Post subject: RE: welcome message

Yes Donna, hopefully your suggestions will help CB.

Thanks for giving some great suggestions. By the way, you own a correction or a collection agency?

gmakerley1 · Posted: Fri Nov 09, 2007 8:09 am Post subject:

i have to take issue with donna's comments. paying off a collection account could never be a bad thing. "removing" collections via the use of a "correction" company is generally an atrocious idea. these "correction" companies will typically charge you a fee to do what you can do yourself for free.

a good lender will guide you throughout the process, reviewing your credit record to see what is owed and advising as to how to go about reclaiming a good record.

you can go to www.annualcreditreport.com - the only authorized site that allows you to view your own credit. there, you can review your credit report once every 12 months free of charge. you will also learn via that site how to correct errors, if any exist.

be careful as to who you deal with in this process.

a1sundevilsfan2 · Joined: 01 Nov 2007 Posts: 32 14.61 Dollars($)

I couldn't agree with qmarkley any more....

Make sure you are very careful who you deal with... Many of the things these "guru" companies do the samething you can do for yourself if you do some research..

Someone mentioned above get a good loan officer. That is SO important. He/she can tell you what you need to clean up in order to get a loan at a decent rate.

As for the statement regarding paying off your collections dropping your score, I have always heard that too. Actually, I have heard everything on both spectrums. FWIW, I paid off some of my collections and my score INCREASED. It didnt jump by leaps and bounds... But, it did increase...

banker0679 · Posted: Thu Nov 15, 2007 11:48 am Post subject: Paying off collection

Paying off an old collection item WILL hurt your credit score. Collection accounts are rated by last activity. If you pay off your collection that was reported 2yrs ago...it will bring the last activity current. You will see your credit score drop! I have helped many ppl fix their credit....and unlike the other ppl promoting...I dont charge.

You can do it for free....learn for free...and pass on the information for free. Googling a lot of terms can help you.

Anothing thing.....if you had a collection account that is very old...and the oldest account on your credit report...and you had it remove...IT WILL LOWER YOUR SCORE. History is one of the major components in your credit score...whether it's good or bad.

gds01gds · Joined: 29 Dec 2007 Posts: 21 17.11 Dollars($)

Its best to just challenge the collections and get them removed. There are legal ways to do this. If you work with a collection company it just prolongs how long it will show on your credit bureaus. There are companies that can help you and you can do this yourself. But it may be best for you to get a credit repair company that has experience with these issues to do it for you. It can be deleted off your bureaus in 30-90 days if you know what you are doing.

gds01gds · Joined: 29 Dec 2007 Posts: 21 17.11 Dollars($)

Folks there are a lot of things you can do to get negatives off your credit reports. Challenge the negatives on your reports with the credit bureaus. They will come back as confirmed like they always do. Now you challenge it again and force them to produce the documentation from the lender. They will not take the time to contact the lender and get these documents. Now they have to remove the challenged negative or produce the documents. Thats where a credit repair company comes into play. The good ones know how to back them into a corner and get this done. They will not spend the time to check everything on your or anyone else's bureau! They are too big and this is not a profitable situation for them -It Cost Them Money! You are a small fish in a big sea and they dont care about your little credit challenge or bureau. You are a number to them and that is it. We challenge everything on your bureau and get 50% of whats challenged off on the 1st challenge because they know we mean business. If you go to them with an "I mean business" attitude you can get the same results but this takes a long time and a lot of learning. Its up to you do it yourself and take a long time or leave it to a reputable company and get it done in most case in 30 -90 days. Like I have said numerous times in my postings today "There is Nothing that can't be removed from your bureau if you know how".

Caron

Hi Glynis,

Indeed there are credit repair companies who are into the business just for the sake of deceiving people with false promises of removing negative items from their credit report. But in the end, when the person whose credit report needs to be cleaned pays more and more in charges, and yet cannot find the items removed, he has nowhere to go!

I agree with you in the sense that choosing the right credit repir company is important really. But are there signs which can make one understand that XYZ is a good company and PQR isn't?

Hope to hear from you soon

good luck

gds01gds · Joined: 29 Dec 2007 Posts: 21 17.11 Dollars($)

Thats why you should check and see if they have had any complaints filed against them with the Better Business Bureau and also if they have a money back guarantee. We have never had a complaint and have a money back guarantee. These are just some things you can look for. I dont blame people for being skeptical of credit repair companies. We as a whole have a bad reputation because of the few that are scams. So everyone needs to be careful when choosing a credit repair company. I would like to ad that if you use a credit consolidation company you just prolong the time that the negatives are on your report and using one of these companies lowers your score and sends up red flags to any lender looking to loan you money. Why arent those issues covered in here and explained to the people asking questions.

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