Should/Will Merrick fix this?

[Hopingforamortgage]

We've had a bumpy credit history.  One, we didn't know, two, we didn't care. 

So, recently, we have moved to our forever state.  It's time to buy a house and put down roots.  DH is a vet, so VA is on the table. 

We pulled a credit report.

One of the big, big baddies on there is from Merrick.  I was confused by this because we pay them a pre-arranged amount every month via auto-draft.

We called them in July 2012 and set up hardship payments due to medical bills.  (Surgery that summer followed by a fifteen day NICU stay in the spring for our daughter. )  Things are well under control now and a lot of the medical bills have been completely knocked out, btw.) 

The first draft came out August 2012.  So I thought we had an agreement.  They charge me overages every month (initially it was under our $500 credit limit and now it's over $750.)  They draft our account for the $15 every month.  I have cancelled checks for the last 18 months.  It's listed on the credit report as 120-150+ past due/late. 

Yet, I have the cancelled checks from every single month.

The credit report, per Merrick, also states we are enrolled in their financial counseling service.

I want to pay this in full, but I want to do it smart.  Is there any chance I can get this to changed, "Paid as Agreed" since we REALLLY did have an agreement with them? 

Suggestions?

This is hurting our score badly from what I understand because it's current.   We have a "semi" pre-qual/pre-approval - meaning it made it through the automated system as a refer, but I don't know that we would make it through manual underwriting and we're pretty nervous.

[Hopingforamortgage]

Reports are 612, 622, and 620 from MyFico with high utlization.  When lender/broker pulled they were 622-629.  We recently (Wednesday) paid off everything down to 1-3%. 

What kind of jump will we see there?

And if Merrick fixed this, what kind of jump would we see there?

[guiness56]

Many times, a creditor fails to mention that although you are paying a financial hardship amount each month, that if the full amount due is not paid, you are considered late and they can report you as such.

Unless the agreement specifically stated otherwise, I don't think they will do anything.

[Hopingforamortgage]

So now my question changes a little....

Trying to get a mortgage for this Spring.

  Do we pay them off now?  They will  then update, correct?  Won't that hurt me by essentially "re-aging" those late payments and dropping our score?

Wait until underwriting tells me to pay it off?

Other?

[RobertEG]

Are they a debt collector or the OC?

[guiness56]

If they are updating each month paying it off should not hurt your score.  If they have not updated with the CRAs, then, yes, it could.

It would be up to the LO whether they required it to be paid or not.

Is this a credit card?

[Hopingforamortgage]

More details

As reported through Experian:

Merrick (yes, credit card)

Date Opened: 8/2011

Date Reported: 8/2012

DOFD: 03/2012

Date of Last Payment 7/2012

Scheduled Payment Amount: $15

Actual Payment Amount: $15

Comments:  Payments managed by financial counselingn program, 150 days past due

Then you know how there is the little graph with asterisks to show payment?

March has an asterisk, April shows a 30 (days late), May a 60, June a 90, July a 120 and then no more info.  However, they themselves say last payment was July 2012.  My checking account records don't go back this far.   BUT I can prove the payment was made in August forward for 18 solid months to this very month.

Now, to my knowledge, the only "financial counseling program" was their collections department (OC - Merrick) agreeing to hardship payments because of medical bills we had at the time which are now under control.

They haven't reported since we were late and we've made that $15 payment ever since then via auto draft - so never late, never missed.

Would it be beneficial to PIF and ask them to update it?  Because then doesn't it look like I made 18 months of perfect payments?  And PIF and now have a zero balance?  Or even just a removal? 

But I'm scared if something goes wrong, all of a sudden I'm going to see "150 day late" (in thier comments) re-age!!!! ACK!  (And where did that 150 come from?  By their on admission I paid in July?!?!

[guiness56]

You can ask them.

But, as I stated before, if you are on a hardship program and only paying the amount agreed upon, they can and usually will report you as late.  Because you are only paying a fraction of what is owed.  You may be making the agreed payments but aren't bringing the late balance up to date therefore, you are late every month.

Does that make sense?  They seldom tell you this and find out when you see your credit report.

[Hopingforamortgage]

Is it better to ask them and try to clear things up now, as we're in the pre-approval mortgage process or is it better to just stick with the payments and if we're asked by the lender or underwriter to pay it off THEN do it?  Sigh.  The things one wishes they had known.

I admit I'm very afraid if we contact them and make some kind of offer or big payment, they'll then "update" the info and it will look immediately recent.  If they reported PIF NOW, would that bump (last report was 8.2012) hurt the report or help it?  As of right now it is just 120-150 days late according to the report.  If we pay if off, then what reports?  Or does it make it look like we JUST had a 120dl? 

[guiness56]

Is the account charged off?

Since it has not updated in almost 2 years, if you pay it, your score will likely tank.  Then if they also add all those lates, it will be really bad.