collections question

[sunnie_321]

I have a current TL that is in collections that I am making monthly payments on. The OC keeps posting KD's on my report although I am making monthly payments on time. I have no other lates in 2 years.  Is this going to prevent me from getting a mortgage in the fall as I plan to?

Thanks!

[MBOhio2]

I have the exact same issue and to answer your question, it completely depends on the mortgage lender you use. Some mortgage lenders require ALL collections to be PIF before they will allow you to close. Some lenders will make exceptions and allow collections to be unpaid as long as you are making payments on the debt.

If you plan to pursue a mortgage before the debt is PIF, then I would bring this up with lenders very early in the process to understand their rules on this so you don't waste yours or the lenders time working with a lender that won't ultimately be able to allow you to close.

The other major issue is that a recent "KD" (key derogatory) will severely impact your credit score, so it may be tough for you to meet the minimum score requirements with this type of reporting. However, this largely depends on what else is on your credit report. If you are able to get to 620-640 despite this KD reporting, then great.

[germaine47]

Has anyone just paid the collection in full, how did the original creditor report?

[sunnie_321]

I just pulled a report from this site and it is reporting as charge off/ bad debt but its showing no late payments on it since 2010? It says charge off but still shows a balance. This is the OC reporting it, the collection agency has not reported anything on any of my reports.  My current score is 609 eq and 591 TU.  I owe $2400 on a TL that has a limit of $4500. I am looking to buy a home in september. Would it make sense to pay off the collection that I am making payments on or just dump the extra money I have on the open TL?  I guess Im just looking at what will best get me to at least a 620 to qualify for FHA..