Does Collections count against debt to Income ratio?

[dodgeball]

I applied for two loans one bank said I was below 20% the other said that I was at 284% debt to income ratio. The only thing I can think of is the other bank counted unpaid collections against my debt to income ratio and the other didnt.

[pizzadude]

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@dodgeball wrote:

I applied for two loans one bank said I was below 20% the other said that I was at 284% debt to income ratio. The only thing I can think of is the other bank counted unpaid collections against my debt to income ratio and the other didnt.

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I'm guessing that's what happened, although with collections you generally don't have a monthly payment, just an outstanding balance.   So they must have factored the balance into your outstanding debt total.    What is the total outstanding amount of your collection accounts ?

[dodgeball]

I have a outstanding balance on collections of about 3000 all medical, but with current payments dont even exceed 100%. But I have never heard of lenders doing this. I have applied for several loans and my loan to debt ratio has never exceded 30% even with the collections on my records. I guess some banks do it diffrent than others.

[dodgeball]

Bump does anybody know for sure if they do this

[Anonymous]

I had my credit pulled for a preapproval (March 1) and my collections account was factored into my debt to income ratio too. It's a small account (thankfully) but I have sent a PFD to hopefully lower my debt to income by their standards.

[RobertEG]

Debt is debt, regardless of its collection status.

What a debt collector reports on their collection account reflects the amount of debt they are authorized to collect.

If the OC still owns the debt, then technically what the debt collector reports is not debt owed to them but merely debt they are authorized to collect on behalf of the owner.

However, if the debt collector has purchased the debt, what their collection is then reporting is still the debt they are authorized to collect, but is also then becomes debt they own.

Debt itself is only reflected once in your credit report.  If the OC sells the debt, then they are required to update their reporting to $0 debt owed.

By just looking at a collection, it is usually not possible to tell whether it also reflects ownership of the debt itself.  In calculating your amount of debt, the bank should be saavy enough to know to only count a debt under collection once.

[Adalen]

I have a collection that shows as a collection on TU but not on EQ/EX.  So, on TU it is NOT figured into my ratio but on EQ and EX it is.  Perhaps that is what's happening with your CR.  Someone pulled one and someone else pulled another.