Underwriting dilemma

[postalmommy]

I currently have a 630 midscore and was told by my LO that scores under 640 can't have over $1k in collecting on their report. So my options are to pay off $3200 collection or try to gain 10pts. My closing date is August 30th so I am thinking settling the debt would be quicker. They won't rerun credit but they will need proof that the account is settled. What would you do? Btw the collection is from 2010 so if you would settle, whatwoild you offer? I had a 1/2 off settlement offer from them in the past.

[Phunior88]

I recommend comparing your options before dropping $3200 at once. A 10 point increase should not be too hard to do. If your LO isn't a complete amatuer, he/she should be able to give you some advice.

See if there is anything else on your credit report that you could improve on. Paying down credit card utlization to below 10% is a quick way to get a credit boost. However how much of a boost is not certain. I paid one card down to 5% UTI and got a 19 point increase. Then I paid another to 0% and got no increase at all.

[206captain]

I would reach out for a PFD first.  IMHO it's the best all around option - you eliminate the CA so it's a non-issue in UW, you will very likely get a small score boost (I got 7 pts), much more if it's your only baddie, and you won't have to deal with it going forward.  Once you get your house you're going to want other stuff...Home Depot/Lowes cards...and having it gone will serve both purposes.

[postalmommy]

Thanks for the suggestions. Unfortunately, it isn't my only baddie; I have some medical collections and 1 CC collections. Everything derogatory is >2 years old. Can I do a PFD AND a settlement? Otherwise, I can't afford to pay the whole thing and my downpayment. Here is a list of my open credit:

CareCredit  $4536/ $5k

Walmart $94/ $300

Kohl's $101/ $300

Fingerhut $270/ $900

PP SmartConnect $35/ $300

Sears MC $0/ $7k (authorized user)

I can pay them all off with the exception of Care Credit.

[NewtoCredit80]

Well paying all the cards except care credit should increase your score as only one card would be reporting balance. Also I would pay card credit where util on that card is below 70% and it no longer a maxed out card. Both steps should get the 10 point bump. Also do not settle any collection without pfd because if a collection reports settled then your score would drop.