What is worse,high utilization or collections?

[golo]

I ask this cause I have 4 cards reporting less than 10% utilization and 1 reporting a whooping 155% utilization.The overall utilization is around 20%,I have like 4 small old collections(5 years),all this is on EQ,my score is 597 and I'm trying to raise it so I can try for a mortgage.I was wondering what would be the best course of action,if I should tackle the card with high utilization or PFD some of the collections? Thanks in advance.

[DaveSignal]

They are both hurting your score.  The util is the fastest and easiest thing to fix, but if you only have a limited amount of money and are able to get a PFD agreement from a collection agency in writing, then absolutely do that first, since you can fix util any time but it is more difficult to get a PFD so you need to jump on the opportunity if you get it.

EDIT:  155%?  You might want to get that below 100% immediately though, as you are probably racking up fees.

[RobertEG]

An unpaid collection is usually the kiss of death in a mortgage app process.

And even if you pay it, CR deletion is tough to get, and it will continue to impact your score until deleted.

I would put immediate focus on the unpaid collections, as they have impact far beyond just a three-digit FICO score.

PFD is not a right, so will take some time even if you get acceptance.

[Anonymous]

Agree with both of the above. First, get the 155% card down to the point where it's fee-less, and then start the wheel of PFD/GW letters.

[golo]

Anybody else have any more experiences on paying collections and getting good score increases? I'm going crazy trying to figure out my next move.Any input is highly appreciated.

[FrugalRican]

Collections.

You can take a bit to get the 155% down, but a collection could be sitting there for 7.5 years even if you PFD every single day.

[OhioCPA]

My understanding is that paying a collection will not increase your FICO score unless the TL is deleted from your report.

[pizzadude]

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@OhioCPA wrote:

My understanding is that paying a collection will not increase your FICO score unless the TL is deleted from your report.

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+1, you won't gain FICO points for paying ~ try to negotiate a PFD agreement whereby they delete the collection in exchange for payment.

[OhioCPA]

As others have stated, the first item is to get the card that is maxed out under 100%, preferrably below 85%. This way you won't be dinged for having a maxed out card. Then I would try for PFD on the collections. If you can't get a PFD then just get them paid.

Once you have accomplished the above I would move the money around on your cards so that none of them are over 20%. Based on the numbers you gave you should be able to accomplish this. While everyone's situation is different, you might be better off have one or two of the cards at 0% and letting the others report slightly over the 20%.

[Booner72]

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@OhioCPA wrote:

As others have stated, the first item is to get the card that is maxed out under 100%, preferrably below 85%. This way you won't be dinged for having a maxed out card. Then I would try for PFD on the collections. If you can't get a PFD then just get them paid.

Once you have accomplished the above I would move the money around on your cards so that none of them are over 20%. Based on the numbers you gave you should be able to accomplish this. While everyone's situation is different, you might be better off have one or two of the cards at 0% and letting the others report slightly over the 20%.

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Anything over 70% is considered maxed out.

Good Luck!!