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reyore279 · Joined: 09 Sep 2009 Posts: 2 1.59 Dollars($)

Would it be better to pay down credit cards or pay off collection accounts? I don't have the money to do both so which one would you advise to do? I am trying to get ready to begin looking for a home to buy in the next 3 months and do not have enough money to do both.

gmakerley · Posted: Wed Sep 09, 2009 11:58 am Post subject:

you are obviously best served to do both, but if you simply cannot, why not try a combination?

in trying to obtain a mortgage these days, you'll find that lenders are more often seeking payoff of all collections/judgments, etc. in that sense, i think it makes more sense to get rid of those. you can reduce your card balances over time, hopefully.

i suppose you would prefer to pay the cards down, since nobody likes to pay collection accounts. if you choose that path, just be aware that a lender might just require payoff of your collections when you try to buy a home.

reyore279 · Joined: 09 Sep 2009 Posts: 2 1.59 Dollars($)

When I pay off collections should I ask the collection agency to trade my payment for them to remove the negative tradeline from my credit report?

gmakerley · Posted: Wed Sep 09, 2009 12:35 pm Post subject:

not quite sure what you mean by "trade" but what you'll want to do is to ensure that you get receipts for your payments immediately (if you do debit card payments, that'll be easy), and direct guarantee that they'll update the credit report as soon as possible (usually within 30 days). they cannot remove the negative, but updating it with zero balance will be adequate.

sunnyca2009 · Joined: 04 Aug 2009 Posts: 1731 35.55 Dollars($)

clear yoru collection first and still keep making the ateastl the minimum on the credit cards and catch up on them afetr you clear your collection stuff

jheard · Posted: Fri Sep 18, 2009 7:51 am Post subject:

If you pay off the collections in full, you can usually negotiate a reduced amount. For instance, if you owe $10,000, offer them $5,000. You can usually negotiate after that for a lower amount.

I would look at the interest rates on the various accounts and pay off the highest rates first.

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Pay down credit cards or pay off collection accounts?