FHA and Collections?

[Anonymous]

Why does paying a collection lower the score?

[MrCredit]

That is good to know then. He said I will be put through automated underwriting.

[PixieQueen80]

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@Anonymous wrote:

Why does paying a collection lower the score?

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It does not technically lower the score.  There is an article on here about it specifically.  I paid over 8 collections for my mortgage and it did not affect my score.  It will only affect your score if the creditor "re-age" the account and have it appear like a new debt (you can challenge that though).

[CS800]

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@PixieQueen80 wrote:

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@Anonymous wrote:

Why does paying a collection lower the score?

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It does not technically lower the score.  There is an article on here about it specifically.  I paid over 8 collections for my mortgage and it did not affect my score.  It will only affect your score if the creditor "re-age" the account and have it appear like a new debt (you can challenge that though).

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Or if the creditor removed the collections and you score skyrockets

[DallasLoanGuy]

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@CS800 wrote:

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@MrCredit wrote:

Does FHA require collections to be paid even if you meet all of their loan requirements?

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In my case I was asked to pay a collection. But as Dallas mentioned different lenders have different rules.

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lenders add their own gudelines to FHA's guidelines.
if th loan officer tells you that FHA requires a collection needs to be paid. you have a dumb loan officer.

[DallasLoanGuy]

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@Anonymous wrote:

Why does paying a collection lower the score?

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you might ask this in the credit section.

no hard and fast rule says it will..... but i have seen it many times.

it lowers the score because a recent paid collection is worse than a very old unpaid one.

[DallasLoanGuy]

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@CS800 wrote:

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Or if the creditor removed the collections and you score skyrockets

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if that works out for you.... yes, that is the best result.

just not all will remove them.

[CS800]

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@DallasLoanGuy wrote:

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@CS800 wrote:

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Or if the creditor removed the collections and you score skyrockets

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if that works out for you.... yes, that is the best result.

just not all will remove them.

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I'm aware of that, one can dream

[Anonymous]

New FHA guidelines that go into effect for all FHA cases opened on or after 4/1/2012 will require you to payoff collection and charge-off accounts if the total of all equals or exceeds $1,000. There's an open thread explaining in more detail with a link to the official FHA rule in the federal register.