Chargeoffs/Collections and Getting a new Home Loan - Home Loan Forum

nykolos · #1 (**permalink**) IP: 75.41.222.67 07-20-2008, 07:52 PM

Not sure if this is the right forum section to be asking this.

I ran into trouble 6 years ago and have collections and chargeoffs on my credit report... I have a few good marks on my report with a middle score of about 610. I was told by one mortgage broker that lenders want these either paid or removed before they would consider doing the loan. I heard from others and some web sites that if chargeoffs or collections are over 2 years old, it wouldn't matter, So which is it?.

Does anyone know the guidlines for Conventional and FHA loans as far as credit is concerned?

I also started using a company but the process is going quite slow and I'd like to buy soon. I live in California and I want to buy a home in the $230K range with 10% down.

Thanks!

Nick

Cat Damiano · #2 (**permalink**) IP: 67.177.243.104 07-20-2008, 08:32 PM

Hi Nick,

Welcome to the forum and thank you for joining..................

On the forum we have threads about how a foreclosure, deed in lieu, and short sale effect the credit with FHA and Conventional loans and the new guidelines about that................

however I have forwarded your post to one of the mortgage underwriter/processors on the forum to take a look at so that they can provide some answers to your question..............

Please check back on your thread for the answers...............

nykolos · #3 (**permalink**) IP: 75.41.222.67 07-20-2008, 10:16 PM

[QUOTE=Cat Damiano;26849]Hi Nick,

Welcome to the forum and thank you for joining..................

On the forum we have threads about how a foreclosure, deed in lieu, and short sale effect the credit with FHA and Conventional loans and the new guidelines about that................

however I have forwarded your post to one of the mortgage underwriter/processors on the forum to take a look at so that they can provide some answers to your question..............

Please check back on your thread for the answers...............[/QUOTE]

Thank you.

I remember 3 years ago I applied for a Mortgage loan through Chase, and they said the marks would not count against if they were over 2-3 years old.. Not quite sure how the guidelines have changed since then. Look forward to hearing from somebody.

Thanks again.

Nick

indymacfighter · #4 (**permalink**) IP: 75.82.246.67 07-23-2008, 07:36 AM

Nick:

What type of collections? If they are medical, no one will make you pay that off or give you a bad deal because of it, especially going FHA. However, you WILL have to provide a detailed letter of explanation as to why you have the collections.

With conventional financing, and with them being 6 years old, you probably won't have to pay them off. However, it will contribute to the credit profile and if the system doesn't like it could affect your ability to get a loan.

How many do you have between collections and charge offs and are some of these collections the same debt as the charge offs? Alot of these collection companies buy these delinquent debts for pennies on the dollar and try to get you to pay them, DON'T. If you have a collection or charge off that is 6 years old, paying it now will only make your credit score go down. The reason why is because with new activity on a negative debt, it reports poorly. Have you tried to get them removed from your credit with each of the three credit bureaus? You can dispute any item and if these companies are not around anymore, and they don't verify with the bureaus within 30 days, they take it off per your request. I worked on my own credit repair for about 6-8 months and got my score up over 100 points. I had 4 paid collections removed, 1 charge off taken off and an old public record come off due to time.

Also, keeping you revolving debt at or under 35% of your available credit limit does wonders for your score as well. If you have a maxxed out card, it significantly affects your score.

I hope that helps.

Indymacfighter

nykolos · #5 (**permalink**) IP: 75.42.196.50 07-23-2008, 03:09 PM

Most all are from credit cards, and the collections are a result of the same cards.... I believe I defaulted on 6 cards total, and I have 1 medical collection for which I had insurance at the time.

I have some new credit, my credit scores are currently 630, 598 and 595

I'm working with a credit repair company now to remove some of these negative marks and bump up my score, but I'm only in the second month.

I heard from others that my score would drop if I were to pay some of these off, I havent done that and dont plan to unless I really have to.

Thanks for your help.