topic Re: Walking the line btw util & coll payoffs in Understanding FICO® Scoring

Walking the line btw util & coll payoffs

Anonymous — Fri, 04 Apr 2008 22:36:04 GMT

I'm weighing the decision.. I have $2500 in med collections left. I could PIF them all w/ the new NFCU cc. The cc should start showing on my CR around 1 May. and would put my util at about 18% on the only CC I have, but would delete eight med collections from 2003-2005 off my CR.

I know so much is dependent on the individual CR sit, but has anyone tried this tactic & if so, what was the resulting increase/decrease/wash in scores??

Re: Walking the line btw util & coll payoffs

Anonymous — Fri, 04 Apr 2008 22:40:33 GMT

Even if it dings your score a bit it'll still look better when you go to buy your house b/c they are going to want you to pay all the old bad debt off if you're on the loan.

Re: Walking the line btw util & coll payoffs

Anonymous — Fri, 04 Apr 2008 22:41:22 GMT

Do you have PFDs? I'm sure you know that just paying them without a PFD won't make them disappear from your reports?

Re: Walking the line btw util & coll payoffs

Anonymous — Fri, 04 Apr 2008 22:43:03 GMT

how soon will the mort happen? how old are the med colections?

you may do more harm than good by paying them before apping the mort.

Re: Walking the line btw util & coll payoffs

Anonymous — Fri, 04 Apr 2008 22:52:52 GMT

Mortgage app won't happen til July. It's a VA loan, so technically credit won't have a *ton* to do with the rate, but we still want to look purty & realize that while the VA may approve with old unpaid collections, an agent may still want the collections to be paid before they'll work with us.

Med bills are all from 2003-2005. They have plenty of time till they fall off, and they are def still damaging score to some extent, esp since pretty much the only credit I have is bad credit. Before 2007, I had 25 collection or otherwise derogatory accounts & only one good account, a PIF SL from 2003. Now, I have two autos, pers loan & soon CC reporting, so there is some positive credit, but all very very new.

Re: Walking the line btw util & coll payoffs

Anonymous — Fri, 04 Apr 2008 22:53:18 GMT

PS. Duh, should have said they will all be PFDs. I won't pay w/o PFDs.

Re: Walking the line btw util & coll payoffs

Anonymous — Fri, 04 Apr 2008 22:56:50 GMT

ivyalmighty wrote:
Mortgage app won't happen til July. It's a VA loan, so technically credit won't have a *ton* to do with the rate, but we still want to look purty & realize that while the VA may approve with old unpaid collections, an agent may still want the collections to be paid before they'll work with us.

Med bills are all from 2003-2005. They have plenty of time till they fall off, and they are def still damaging score to some extent, esp since pretty much the only credit I have is bad credit. Before 2007, I had 25 collection or otherwise derogatory accounts & only one good account, a PIF SL from 2003. Now, I have two autos, pers loan & soon CC reporting, so there is some positive credit, but all very very new.

well it's a very short span. i vote pfd's for the ones willing to pfd/ the rest let the lendor condition to be paid at closing.

i say this not to advise to try get out of paying a debt. rather paying a 2003 ca could (and usualy does) trigger "recent collection activity" fico drops.

Re: Walking the line btw util & coll payoffs

Anonymous — Fri, 04 Apr 2008 23:02:07 GMT

Yeah, I found that out the hard way by paying 4 from 2003-2005... that really hurt my heart

I am also wondering... would the drop in scores be written off during underwriting when I explain it is low b/c of all the recently paid collections? (those that I can't PFD)..

Re: Walking the line btw util & coll payoffs

Anonymous — Fri, 04 Apr 2008 23:04:49 GMT

ivyalmighty wrote:
I am also wondering... would the drop in scores be written off during underwriting when I explain it is low b/c of all the recently paid collections? (those that I can't PFD)..

i wouldn't chance it. i know you said va, and this may not apply but programs are score driven. beleive me, they will make it a condition for items to be paid if that's what it takes to close the loan.

Re: Walking the line btw util & coll payoffs

Anonymous — Fri, 04 Apr 2008 23:20:41 GMT

So you think even if I am able to PFD them all, the 18% util on a cc will drop my scores more than they will rise with the collections gone? (Just making sure i have it right... I'm so torn about how to handle this)

Re: Walking the line btw util & coll payoffs

Anonymous — Fri, 04 Apr 2008 23:22:45 GMT

well one maxed out cc can hurt as much as 1 ca, a 20% utilized cc has got to hurt less than several ca's.

Re: Walking the line btw util & coll payoffs

haulingthescoreup — Fri, 04 Apr 2008 23:25:42 GMT

@Anonymous wrote:
So you think even if I am able to PFD them all, the 18% util on a cc will drop my scores more than they will rise with the collections gone? (Just making sure i have it right... I'm so torn about how to handle this)

That doesn't make sense to me. I think some of us got tangled up at the beginning of the thread with the PFD vs PIF, and haven't quite gotten untangled.

Every collection that you can PFD, and thus make vanish from your reports, should help, with the possible problem that your average history will drop. But collections are so bad to have on your reports that I personally would take that risk. If you wind up having some collections that can't be gotten rid of with a PFD, then yes, there's a good chance that the lender will require that they be paid off. If so, I can see doing this at the last minute, printing out your scores beforehand in case the recent activity drops your scores again.

Mortgage lenders have seen this problem enough that with luck they can tell you if any last-minute score drop will be recognized as a function of collections payoff. HTH

Re: Walking the line btw util & coll payoffs

Anonymous — Fri, 04 Apr 2008 23:29:43 GMT

Ok, so we will up the util on the card slightly to pay these down, IF they will PFD. If they won't agree to PFD, then I'll jsut leave them alone. I don't see 20% as being *horrible* util anyway.