Help the lady that just commented please. Lar - Should you pay off an old collection? Maybe not now.
Credit Wrinkle: Tip
Did you know that your credit score will probably get worse, not better, if you pay off an old collection?
Tip: Don’t pay off old collections if you are about to purchase a home. An experienced loan officer can guide you through what to do and when.
You can ask questions about this on this forum. Click Comment 1st and type in your question.
Larry Cragun
I am trying to pay old debts and tried to apply for a loan to purchase a home, my score came back very low. The loan officer said to try and pay those debts before applying again. Is that the only option?
Hi Irma, you can email me also, if you have details you don’t want to be live to the world. (larry@mortgagesundressed.com)
Sometimes you can get a high interest loan with low credit scores. This is probably a bad idea, with prices dropping a bit, working on your problems for a year might be smart.
If the scores are from old issues, an FHA lender may be able to get you a home loan at a decent rate. We may be close to having 0 down FHA loans.
In general there are a few main points I can say: Paying down debts is always helpful, they at least raise your score and help you qualify for more - easier. Your score could be low by having your lines of credit too high.
FHA loans help if all the things affecting your score are old, such as old collections.
I would be glad to go deeper for you if you think you are ready.
Iam trying to get a loan on my home which i had built 2 yrs ago.I am sole owner but when they checked my credit,a DDS bill for my son came up. the bill will be 7yrs old in March. I have had state medical ins. since he was born it pays 100%. This nerver came up when I bought the home but showes up now. The bill is for $3500.00. My question is Do I call the DDS and bring this to their attention I do not recall it being a cash account, Is there a statue of limitations of 7 yrs and if so should i wait till March? The mortgage officer is saying that i have to pay off any collections i may have, also my truck and other bills with the loan. so instead of $25,000 I asked for they moved it up to $40,000 to pay off all my bills.also what kind of loan is best for me? what do i do?
I will bring this forward for others to comment on.
An attorney could answer the statute question. Is it a judgement against you? That is important. If you have a large enough equity the lender may let it close without paying it off.
The fact you have to pay off truck and other bills implies you are having a problem with your income to debts ratio. This may make you resolve the DDS before you can close.
I would say don’t panic and take some time to find out what you can do to resolve the debt. Is there a collection agency involve is also important.