Paying off old collection
10-05-2012 11:14 AM
In college I was really stupid with credit. I opened 2 cards in 2004-2005 with $2000-3000 limits and one with $300 limit, maxed them out and eventually went into collections. I also had a medical account go into collections in 2008 and was paid off right away. That was 5-6 years ago, and I have since made some payments. I am looking to purchase my first home, I have a FICO score of 688 and Experian score of 660, I make 38k/year and have 2+ years of timely payments...
I am now settling these really old collection accounts because I was told by my bank that I have to have these completely paid off before a mortgage broker will even talk to me. These accounts will be settled by 10/31/12... how badly will paying these of affect my score? How long should I wait before working on a mortgage loan?
Some people say paying these collection accounts will in essence reset them on my credit report and they will now stay on for an additional 7 years. Will they still be timed off my report in the next 12-24 months or will they now remain for another 6-7 years? Since the original creditor information will fall off, the collection count should fall off too right?
Do I have any hope?!?!?
Thanks to anyone who can answer some questions!