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Member
Posts: 9
Registered: ‎03-20-2012
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Old Collection on my credit

I have applied for a FHA loan, I have 1 old collection account that is almost 4 years old on my credit for about $8,000. My LO told me not to worry about paying it because its so old. I know that FHA has a new guidline that any collections over $1,000 must be paid.

 

Will I have to pay this off or will it not matter because the account is nearly 4 years old? 

Valued Contributor
Posts: 3,406
Registered: ‎12-19-2012
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Re: Old Collection on my credit

I don't think that guideline is universal. I just closed on an FHA loan 2/6/13 and I had an unpaid collection that was close to 4 years old in the amount of $1100 that did not have to be paid.

$8000 is pretty significant. What is your credit score?

It is possible the collection will have to be paid, but ask to pay it at closing.
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! :smileyhappy: Last App: 4/5/13 Gardening until July 2014
Established Contributor
Posts: 546
Registered: ‎12-28-2012
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Re: Old Collection on my credit

$8,000 is a large amount. I would think they would want that paid; however, each has their own rules.  Does it have a judgement on it? 

 

 

My Wallet: Amex Express BCE $27,000, Amex Express Blue Sky $6,000, Discover $10,000, Chase Freedom $5,000, Capital One $3,750, Barclay $8,500 (AU), Jared $10,000, Pottery Barn $8,000, Sam's $10,000, Ashley's Furniture $6,000, Lowe's $7,500 (AU), Express Next $3,360, and Macy's Store Card (Joint Account) $2,000.

Last Application March 25, 2014. Score ranges 700+
Member
Posts: 9
Registered: ‎03-20-2012
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Re: Old Collection on my credit

My mid score is 653. There is no judgment on it. I am willing to settle it, but I am trying to hold on to the money in my savings to help with downpayment. My LO said it probably wouldnt matter, but I just wanted to get some others opinions.

Valued Contributor
Posts: 3,406
Registered: ‎12-19-2012
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Re: Old Collection on my credit

Your mid score is a tad bit low so I would be prepared to pay it. The LO can say one thing, and the underwriter does another...so beware.

If the collection wasn't for so much, I would agree that it doesn't have to be paid but I admit, I am skeptical.
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! :smileyhappy: Last App: 4/5/13 Gardening until July 2014
Valued Contributor
Posts: 2,661
Registered: ‎04-25-2011
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Re: Old Collection on my credit


jayson79 wrote:

My mid score is 653. There is no judgment on it. I am willing to settle it, but I am trying to hold on to the money in my savings to help with downpayment. My LO said it probably wouldnt matter, but I just wanted to get some others opinions.


what is the SOL on this debt? The fact of if you can be successfully sued  for the debt might be the deciding factor if you will have to pay it.. if it is outside the SOL, the bank has no risk... if you are inside, they could sue and the mortgage could be at risk...

 

-scott

Starting FICO Score: 10/10: TU 498 | EQ: 502 Current FICO Score(lender pull): 09/14: TU: 784 | EQ: 752 | EX: 784
Collections Removed: Hunter Warfield, CBE Group, Merchants Credit Guide, EOS-CCA, Enhanced Recovery, Portfolio Recovery, UCB, American Collection Company, Medical Business Bureau, Jefferson Capital, Credit Portfolio Associates, FCO, LVNV, Convergent, Armor Systems
Other Negative Entries Removed:Plains Commerce CO, HSBC CO, 2008 Judgment Santander Reposession


Positive Accounts:10/10: 0 | 07/12: 6 | Mortgage Closed 5/12, Macy's AMEX $13900, Citi/Home Depot $8500, Capital One Cash Rewards $3500, BOA $7500 Total Utilization: 3%. AAoA: 2yr, 9mth. INQS: 1 TU, 1 EQ, 3 EX
Valued Contributor
Posts: 2,300
Registered: ‎08-25-2011
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Re: Old Collection on my credit

If your LO has a good relationship with underwriting and knows what has happened in the past you may not have to pay it.

 

I would cruise along and go with it, worst case be prepared to pay it.

Valued Contributor
Posts: 3,406
Registered: ‎12-19-2012
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Re: Old Collection on my credit

+1
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! :smileyhappy: Last App: 4/5/13 Gardening until July 2014
Super Contributor
Posts: 6,624
Registered: ‎07-03-2007
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Re: Old Collection on my credit

[ Edited ]

jayson79 wrote:

. I know that FHA has a new guidline that any collections over $1,000 must be paid.

 

 


there is no such guideline.

 

some lenders might have that guideline, but FHA does not

 

* While I try to visit the forum often, please feel free to contact me directly with a link to your post if I fail to answer a follow up question.

* Lending across the entire 'Great State of Texas' since 2004
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