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mike111

would pay off an old collection item reduce my credit score?

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I have a collection item from 01/2003 for $276 from Pierce Hamilton & stern.

I called and they said they would only mark it as paid but not removing it from my credit report.

Would paying it off in full actually reduce or increase my credit score? by how much?This is a collection from one of my landlords who withheld my deposit and trying to collect more money for no good reason. Should I ask for verification for the debt, how should I go about this?

I already disputed this with the credit bureaus and came back as verified, how should i go about dealing with this? I hate to pay it as I didn't even owe them money to begin with, but if I have to I will, but want to make sure it doesn't lower my credit score if I do.

any suggestion/advise is appreciated.

thanks

Mike

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Truthfully, you need to DV them. I would only pay a CA as a last resort and never to just get a "paid collection"

A paid collection does nothing for your credit score

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Truthfully, you need to DV them. I would only pay a CA as a last resort and never to just get a "paid collection"

A paid collection does nothing for your credit score

sorry, I'm new here. What's a DV? :p

Any detailed steps I might be able to take to DV them?

Many thanks.

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DV= Debt Validation. Getting them to send you proof you owe them, how much you owe them and I believe something with your signature on it.

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DV is a dispute/validation letter.

Read this:

http://debt-consolidation-credit-repair-service.com/phpBB2/viewtopic.php?t=24558

Then read all of the sticky's at the top of each forum. I know it is alot of reading, but messing up your credit took time and fixing it will take time and effort as well.

When you are done reading, come here and ask. Plenty of us are glad to help. There is alot of experience and brain power here. Even though we all don't always agree, we do get along and respect each other for the most part. There is more than one way to skin a cat and we generally do a good job of proposing alternatives.

Good luck!

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DV= Debt Validation. Getting them to send you proof you owe them, how much you owe them and I believe something with your signature on it.

ok thanks.

and any follow up steps after that? what if they don't respond?

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DV is a dispute/validation letter.

Read this:

http://debt-consolidation-credit-repair-service.com/phpBB2/viewtopic.php?t=24558

Then read all of the sticky's at the top of each forum. I know it is alot of reading, but messing up your credit took time and fixing it will take time and effort as well.

When you are done reading, come here and ask. Plenty of us are glad to help. There is alot of experience and brain power here. Even though we all don't always agree, we do get along and respect each other for the most part. There is more than one way to skin a cat and we generally do a good job of proposing alternatives.

Good luck!

thanks! thanks!

I think I found the right place!! 8-)

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Dive-

Although a paid collection does nothing to increase your credit score, a collection with a balance could be a deal breaker when you are trying to get a mortgage.

My friend is the branch manager for Countrywide in CT. I asked him this yesterday and he tells me this is the case.

Would you concur?

FCS-

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Yes, many mortgage lenders want delinquent obligations paid. That way if you default, they are the only lein holder. They don't wanna stand in line.

That is why it is a good idea to fix your credit BEFORE shopping for a house. That way time is on your side.

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Dive-

Although a paid collection does nothing to increase your credit score, a collection with a balance could be a deal breaker when you are trying to get a mortgage.

My friend is the branch manager for Countrywide in CT. I asked him this yesterday and he tells me this is the case.

Would you concur?

FCS-

I read somewhere that I should pay these old collections off at close of escrow, but not before for it may actually lower my score. Is that correct?

Also, my current scores are 645 tu 659 tu 671 exp . Can i get a reasonable mortgage with this? what's a minimum score for a reasonable mortgage? I applied for a secured credit card last month and that bumped up my fico score 9 points for exp. (not sure about the other one as I only monitored fico score for exp)

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Mike-

Also, if you do as Dive suggests and read up on these things, you will staret to realize that it is in your power to control your credit. It is not in the OC or CA's power.

Good luck!

FCS-

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Mike,

Try DiveMedic's idea of cleaning your credit up first...

You will probably get a better interest rate and loan package than if you wait until escrow and closing...

:wink:

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I got a pretty good mortgage with a 621 middle score (EQ). I also applied for a secured card and it's helping my report slowly but surely. I had two collections, one for $700 and the other for $9,000 - both from 5 years ago. The lender did not require me to pay them off since they were over 2 years old.

Since I'm closing on the home this Friday (4/15) I don't have the need for much more credit (I have a car and cc, that should do)...and quite frankly I don't want any. The next thing I do will probably look to refinance in 1-3 years, but they will be gone by then. Of course, my scores should be much better just by the fact that my mortgage and cc each will have a 2 year history behind them.

________

Glass Pipe

Edited by kevin3344

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"A collection with a balance could be a deal breaker..."

Not necessarily. If you spoke with a Loan Officer working for a particular company, like Countrywide, he is probably speaking about their own guidelines, not industry standards. While there are many mortgage lenders who want collections to be paid, there are others who disregard them completely. The general rule is that anything outstanding, excluding all medical, that has been updated in the past 24 months would need to be paid prior to closing.

So, you gotta be specific.

Paying collections that have been reported in the last 12 months will have no impact on your score. It may impact the amount of money you have available to you for down payment and closing costs. Paying collections that have NOT been updated in the last 12 months may decrease your score. This decrease is effective for about 13 months. So, be careful when you start paying things off.

There are many lenders who will finance "concessions" at about 4% of the loan to pay off things (including collections or credit card balances), it depends on the program/lender. They also allow financing of 3% for closing costs. This is all score driven. So, you wouldn't want to pay off some older collections and lose a couple of points, when this could be factored into your deal.

It all comes down to what your goals are, and how much time you have. If you want to obtain a mortgage loan in the next 6 months, paying off/settling collections could be a very bad idea. If you have 18 months to work on this strategy, go for it. You really need some guidance. Any mistakes you make at this point might cost you thousands.

Try to find an independant mortgage broker with experience with tons of lenders and credit. They will find a program that fits your situation and give you advice tailored for you.

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