What Should I Do????

[Anonymous]

Started the process of buying a home earlier this month. Had got rid of all of my negative collections. Built my crdit scores up to 721, 746, and 792 within 18 months. On October 17th, my loan officer pulled my credit reports to see what mortgage rate I would qualify for and my score had dropped over 60 points because a new collection from 2008.

This account is with AT&T and its being reported as a recent account with a date of October 2012.To get the best finance rate I need to handle this situation Quickly.

I tried a PFD but was denied several times. The CA offered to settle and mark my account as Paid In Full. If I go that route will it help raise my credit score? I was told by loan officer that since the account is being reported as a new delinquent that it will raise my score. Is this true? The reason Im worried is because I've heard of people paying off collections and their credit scores dropped. I don't need my score to drop anymore since im in the middle of getting my home loan.

What do you guys think?

[Shogun]

Paying it will not necessarily raise or lower your score.  A paid collection is typically the same as a paid collection.   However I have seen people with scores that go up and go down with payment.   Try again for the PFD, that will be your best course.

[HiLine]

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@Shogun wrote:

Paying it will not necessarily raise or lower your score.  A paid collection is typically the same as a paid collection.   However I have seen people with scores that go up and go down with payment.   Try again for the PFD, that will be your best course.

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Would you mind elaborating on the bolded part? Did you mean to say "unpaid collection"?

[Shogun]

Should have read a paid collection is scored about the same as an unpaid collection.

[RobertEG]

Most mortgage lendors will require, apart from appraising your score, that any unpaid, delinquent debt be paid as a condition for loan approval.

So non-payment might not be an option.  Has your lendor made this stipulation? If so, you would have no option other than to pay, and wait and see.

I would not assume that payment will produce any score improvement. Some have posted in the forum that recency or updating of collection reporting resulted in scoring affects, while others opine that the impact is based only on the DOFD.  So hard to say definatively. 

However, I am perplexed, regardless, of how the issue of payment would affect the issue of impact of their reporting date? 

Seems to me to be apples and oranges.....