question about collection/charge off

[Anonymous]

I have a paid Frontier charge off. When I look at my credit report, it is listed under installment accounts. I'm getting worried because I paid it off in February, and if its listed as an intallment account, will I have to wait until a year passes from the last payment (when I paid this charge off)?

[NC_Mtg_Loaner]

I'd worry more about what your open and active account creditors are reporting to the bureaus on your behalf since this makes up 67% of your scores.

If your paid collection charge off shows zero balance then that's about as good as it can be--unless it gets gone.   Do a little research and see about writing them a Goodwill letter and see if they can remove it altogether.

[Anonymous]

Sorry, I wasn't clear with my question. I have to wait til August to buy since I have a late from last July, and August will make it a year from when I had a late payment. That was from a charge account. This frontier is being reported as an installment account, even though it's not. Will I have to wait until a year from when I paid it, to get a mortgage?

[NC_Mtg_Loaner]

What type of accounts do you have that are still open and active?

What's your credit score now?  

[Anonymous]

middle mortgage score is 606. We have three credit cards in good standing,  two charge cards (the one has the late from last july), and two car payments. My school loan has a late form Jan. 2016, but has been in good standing ever since then. 

[VALoanMaster]

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@KS21 wrote:

middle mortgage score is 606. We have three credit cards in good standing,  two charge cards (the one has the late from last july), and two car payments. My school loan has a late form Jan. 2016, but has been in good standing ever since then. 

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Hi Ks21,

What type of mortgage do you plan on applying for, FHA or VA?

[Anonymous]

FHA. Our lender said that if we get our score up to 620, we wouldn't have to wait until August for the charge card late pay. to age off.  But now that I see that Frontier is reporting as an Installment loan, I am worried that it will be a year from when I paid that charge off. I asked my lender that question and she just said, "We'll have to see when we get to automatic approval".  I am frustrated because if she thinks that it will be looked upon as a intallment account instead of just an internet company that was charged off, I may just go to another lender. This could ruin everything and she isn't answering my question. 

[Anonymous]

Your concern sounds like an lender overlay. Them asking for a 620 for FHA is an example of a lender overlay. 

I have a charge off that happened in February 2017, and I paid it in full that same month. Our lender knows about this and has not mentioned it would be an issue. 

[Anonymous]

Yes, it is an overlay, however, I am thinking that every lender would like no late payments in the past year, so I actually like the 620, because its letting us get approved before the year is up if we have the 620. My concern is that if Frontier is reporting as an installment loan, then we would have to wait until a year without a late payment, which would be Feb. 2018. If its just a charge off, I think we're good. 

[VALoanMaster]

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@KS21 wrote:

FHA. Our lender said that if we get our score up to 620, we wouldn't have to wait until August for the charge card late pay. to age off.  But now that I see that Frontier is reporting as an Installment loan, I am worried that it will be a year from when I paid that charge off. I asked my lender that question and she just said, "We'll have to see when we get to automatic approval".  I am frustrated because if she thinks that it will be looked upon as a intallment account instead of just an internet company that was charged off, I may just go to another lender. This could ruin everything and she isn't answering my question. 

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A 620 score doesn't mean that you're going to be automatically approved through an Automated Underwriting System (AUS). Your loan officer can't do FHA loans with a score under 620 so their whole goal is to get your score up to a least a 620 & then they're going to cross their fingers & hope that your file get's approved through the AUS. You need a lender that can do FHA loans under a 620 score & is also willing to do a manual underwrite if your file doesn't get approved through an AUS.