Financing in Clementon>Question Details

Lwebb26, Home Buyer in Lawnside, NJ

FICO score in regards to mortgage loan

Asked by Lwebb26, Lawnside, NJ Fri Feb 8, 2013

when paying off delinquent accounts on your credit is it ok to pay a settlement amount, or is paying the full amount more beneficial to your FICO score?

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Great. Good luck to you! Call me if you want help finding a home!
0 votes Thank Flag Link Fri Feb 8, 2013
my bank, the credit union offers credit counselors and financial advisement free to its members so i will take that advice and speak to someone. Thanks everyone
0 votes Thank Flag Link Fri Feb 8, 2013
Again, you should not pay or even contact the original companies and/or collection companies until you sit down with a mortgage banker. I live near Lawnside. Would you like to get together this weekend for coffee at the Haddonfield Starbucks? My treat?

0 votes Thank Flag Link Fri Feb 8, 2013
Sometimes doing a Settlement has hidden consequences. Some unscrupulous collections companies will accept your partial payoff, then leave the unpaid balance on your credit report but not collection on it. But it appears to us lenders that you still owe the money. Just make sure you request a letter of deletion or at least make they state in a letter: Upon verification that payment has been received, the debt will be considered settled in full. If at the end of the day they will not give you a letter of deletion and will only give you a letter that states," Settled" or "Settled for less than full balance", that alone is NOT a deal killer. We lenders are looking for intent. If you are willing to clean out the closet out by paying off old debt. That shows us you good faith and responsibility.

Best of Luck!
0 votes Thank Flag Link Fri Feb 8, 2013
right now my credit score is a 603. I have 2 delinquent accounts on my credit report under $400 which im ready to pay. No major delinquencies... just unsure if paying the whole balance is better than paying a settlement amount. Ready to buy a house in the next 2 months.
0 votes Thank Flag Link Fri Feb 8, 2013
You should contact a certified public accountant (CPA) or a financial advisor to get the best advice on how to handle your situation. The delinquency is the main issue. Credit delinquencies can stay on your record for up to seven years.
Personally, I'd be wary of any websites or services that offer to fix your credit for a fee unless a reputable specialist (a financial advisor or certified public accountant) directed you to do so.
Good luck with repairing your credit and buying a home.
0 votes Thank Flag Link Fri Feb 8, 2013
This is crucial! I have written several blogs on the subject so please browse my list of articles and read. The short answer is BEWARE!!! I have helped thousand of clients over the years negotiate the payoff of their debts. There are some basic rules

1.) What you do and how you handle this payoff could actually HURT you! Paying off old collections can and will drop your score. If they are insignificant don't pay them off now wait and speak to a Loan Officer/Credit Specialist and let them tell you how to proceed.
2.) Always try to negotiate a settlement for less than the full balance but request a letter of deletion
3.) Always get it writing! Request a letter of deletion first if the collection company says they won't issue that go over the person head and ask to speak with their supervisor. You may have to pay the full balance in order to get your golden ticket (deletion letter).
4.) Not all collections need to paid off i.e. Medical Bills.
5.) Large balances from past Auto Repo, past due credit cards, etc. If you can't pay them off, get into a payment arrangement, with 3-6 months proof of payments most lenders like me won't require it be paid off.

My suggestion is to speak to a LO with extensive credit experience before you do anything. Remember your final goal if to qualify for a home loan. Let the Loan Officer give you the road map.

Best of Luck!
0 votes Thank Flag Link Fri Feb 8, 2013
Before you do ANYTHING, check with a mortgage professional. I just attended a seminar where I learned that sometimes "reactivating" old debts by calling them to get a settlement amount can actually LOWER your score. Your middle credit score should be about 540.

If you need the name of a good mortgage banker, just email.

I live neat Lawnside!

Eric Axelson, Associate Broker
Licensed in NJ and PA
Kurfiss Sotheby's International Realty
856.979.5967 m
0 votes Thank Flag Link Fri Feb 8, 2013
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