Two negative account on credit report

[Anonymous]

I am looking to buy a new house at the end of this year or the beginning of next year.  My monthly gross income is about $12,000, and I am going to be looking at houses in the $300,000 range.  I have a 630 credit score, and currently have a mortgage with no late payments ever, and no late payments on any other credit cards.  I did discover recently that I have two closed accounts that were in collections, one for $25 and one for $27 (an internet providor and a doctor's office).  I intend to try and repay the $52, but assuming I can't get these two accounts off of my credit report, am I going to have a major problem getting approved for a new mortgage?

I have a couple of credit cards that are near their maximum credit limit that I am paying down, so I believe that will boost my credit score to the 650 range, but I am concerned that these 2 accounts are going to preclude getting approved despite an 'okay' credit score.  I am intending to apply for an FHA loan.

[pengy_wi]

The older they are the less they hurt. Try contacting them and agree to pay if they delete them before just paying them. Collections don't have to kill a loan, my DH has 5 of them on his report and was approved with a 661 midscore.

[rckstrscott]

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@Anonymous wrote:

I am looking to buy a new house at the end of this year or the beginning of next year.  My monthly gross income is about $12,000, and I am going to be looking at houses in the $300,000 range.  I have a 630 credit score, and currently have a mortgage with no late payments ever, and no late payments on any other credit cards.  I did discover recently that I have two closed accounts that were in collections, one for $25 and one for $27 (an internet providor and a doctor's office).  I intend to try and repay the $52, but assuming I can't get these two accounts off of my credit report, am I going to have a major problem getting approved for a new mortgage?

I have a couple of credit cards that are near their maximum credit limit that I am paying down, so I believe that will boost my credit score to the 650 range, but I am concerned that these 2 accounts are going to preclude getting approved despite an 'okay' credit score.  I am intending to apply for an FHA loan.

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If they are paid, and older than a year, I don't think you'll have much issue getting approved if you can get your score where ya need it..

What is your credit card util like?

[GoodCredBen]

If those are your only issues, get your credit utilization down to 1% and attempt to PFD those two collections/charge offs.....

The quicker you can get that taken care you your score may jump a bit (deleting and getting your utilization down) if there was nothing else wrong on your credit report, I foresee you getting anywhere from 20-120 +++

This is only from what you have told us though. i can not guarantee anything. 

[Anonymous]

Credit Card Utilization is not great -- around 70% right now.  Total debt to income ratio is currently at 20% including my current mortgage.  It's currently a rental property (I rent a house in another area).  If I buy another house and keep the rental property, my DTI will be around 40% when the rental is vacant.  (Well, I will be paying down the credit cards before buying the house, so I suppose it will be quite a bit lower than 40%)

So it seems I can get my CC utilization way down and that is the best thing I can do to help my score if I can't get these two collections accounts removed.  Would a letter of explanation help me with a lender?  I don't believe I owe either charge, but since they were so small, I figured it would be easier to pay them off than open a dispute.

I checked my TU score, it's at 681, but it doesn't show either of the collections, so I would imagine if they ever hit it, it will go down as well, although it's been 7 months or more since they hit my Experian credit report (the 630 score).  Bummer, because when I purchased my first house in 2009, my scores were all above 700.

[pengy_wi]

If you don't think you owe them then disputing is your best option, they may just get deleted. If you pay them they'll just update to paid on your report and that doesn't help your score. They may not show on your TU if that agency doesn't report to them, some only report to one.

[GoodCredBen]

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@pengy_wi wrote:

If you don't think you owe them then disputing is your best option, they may just get deleted. If you pay them they'll just update to paid on your report and that doesn't help your score. They may not show on your TU if that agency doesn't report to them, some only report to one.

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Never, ever EVER EVERRRRRR dispute something you know is correctly reporting... there are other methods to do and that is not one myFICO supports.

That could also make the TL refresh causing it to look worse on your CR....

I would go the route of seeing if you can get them removed with goodwills....

I was just approved for a mortgage with over 5 paid collections on my reports....

no biggie, they just ask for a letter of explination... which your LO should write for you!!!