Approval with collections less than $1000?

[Megacab07]

A couple of months ago I talked to a LO to find out what we would need to do about getting approved for a mortgage since I knew we had some credit issues. She told me what we needed to do and added the comment that we could have unpaid collections of up to $1000 combined and still be approved. We have paid off and got most deleted, but I have one unpaid of $597 from 2009. I know that paid collections are always much better than unpaid and has affect on interest rates, etc, but I really dont want to pay that one if I don't have to. Has anyone else had experience with that condition and can shed some light on it? Has anyone else heard of that $1000 allowance condition on collections?

[Anonymous]

Originally, the stipulations were to go in effect as of April 2012, but was changed to July 2012. If you owe $1,000 or more, they are either requiring full documentation that  the debt is erroneous, a payment plan has been established (proof of the existing payment plan) or paid in full.

I hope this helps.

[Anonymous]

Be careful about who you pay and when!

I am trying to close a loan this month, and stupidly, I paid all of my collections about a month ago without asking any questions. My eyes were on the prize, and I just wanted to get my accounts cleared up as soon as possible. I later found out that one of the accounts I paid was not valid to begin with. So now, in addition to their reps being complete jerks and refusing to give me a PIF letter for my fully paid account, I have to figure out how to reclaim that money, and I"m pretty sure I'll just never see it again. If you owe MediCredit anything, DO NOT PAY THEM for the love of everything holy. They are one of the most unprofessional and sneaky collection agencies I have ever encountered, and I've dealt with some real buttholes. I seriously get the feeling that they are all sadists who enjoy screwing with me because they know I need that letter.....EEEEEVIL.

From what I can tell, things like collections vary a lot from lender to lender, but anything over $1000 is certainly going to carry more negative weight. I'd suggest that you first find a lender you trust and feel comfortable working with. Maybe go through preapproval/prequal or at least discuss your credit reports together and get an idea of what you can ignore and what you have to pay out.

Hope that helps! Hang in there....

[rckstrscott]

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@Anonymous wrote:

From what I can tell, things like collections vary a lot from lender to lender, but anything over $1000 is certainly going to carry more negative weight. I'd suggest that you first find a lender you trust and feel comfortable working with. Maybe go through preapproval/prequal or at least discuss your credit reports together and get an idea of what you can ignore and what you have to pay out.

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If the OP is going FHA, this $1000 dollar threshold will not vary from lender to lender, it is stipulated by FHA regs..

-scott

[Megacab07]

Thank you for the responses!!

So the FHA stipulates that as long as our collections are less than $1000 we can get approved? Are there stipulations within the stipulations? lol..meaning, do I need to have a higher credit score for them to overlook my one unpaid collection of $597? I have one other collection on my report, also from 2009, for around $200 but it is paid. Everything else is in good standing.

 My scores are still fairly low, 623 TU and 626 EQ because of a student loan that I was past due on years ago. It's been in good standing since 2007, but because I was late when the loan was transferred to another company and the loan shows on my CR as 4 loans (for each company, for a total of 8) it looks like I've been late on 8 accounts. I've talked to the SL company to see if they would help me with that, but they refuse so until the old, transferred loan comes off, I'll have to live with it.

My husband's credit was a nightmare, but we have cleaned it up quite a bit. Still, he had a BK discharged in 2006 and he has a couple of paid collections from 2007 with a collection agency that refuses to remove them and added dispute comments (which we got deleted). His score is now much better than mine. 711 TU.

Even with the $1000 allowance for FHA, should I suck it up and pay the $597 since we have so much other negative-looking stuff on our credit?