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Need advice regarding collections

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Anonymous
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Need advice regarding collections

Background:  A few years ago I went through some really bad times:  had nervous breakdown and suicide attempt, lost my job, lost my house, lost custody of my son.  Don't feel sorry for me; most of it was my fault and I learned a lot.  After I got out of the hospital I had to get a job that paid a lot less than I had been making, and since my job was my only source of income I had trouble making payments on a credit card that I had used for expenses and I also had trouble making payments on my utility bills.  Long story short - I have many negative items on my credit report for the period 1996-present.   I'm now doing great and have a good job; there were times when I worked two jobs to pay my bills and save money.  I am trying to raise my credit scores so that I can buy a house early next year (Jan/Feb 2008) in the $110,000-$120,000 range.  I have saved about $10,000 for my downpayment, and plan to have $15,000 by the time I buy.  I also have two different secured credit cards where I've put deposits of $3,000 and $2,000 but I do not carry a balance on either of them and I never put more than $50 on either card in any one month) - and I've never been late on the credit cards or on my auto loan.  I have also been paying off the collections because I realize that I still owe the money even if it was years ago.  My credit scores in May 2005 were in the range of 490-520.  My credit scores in May 2007 were in the range of 560-585.  Progress is slow, whether you're recovering from a personal loss or trying to raise your FICO score.  And, as someone told me, if it wasn't for bad luck I wouldn't have any luck at all -- just when I'm ready to buy a home, the subprime market tanks.  I have no illusion that I would qualify for anything but a subprime mortgage.
 
My questions:  
 
1.   Did I screw up by paying off the collections?  It was a moral victory to me, but since they remain on my credit report for seven years, does paying off the balance matter to lenders? Does it increase the amount of time that it stays on my credit report? 
2.   The foreclosure of my home in 1997 no longer shows up on my credit report (if it ever did because the report shows the mortgage as being paid off and doesn't mention a foreclosure).  Will the mortgage lender find out about the foreclosure?  How will that affect their decision in giving me a mortgage?
 
Thanks for your help.  I've been reading the different forums and they have been very helpful.  Thank you.
Message 1 of 2
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Anonymous
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Re: Need advice regarding collections

1. Did I screw up by paying off the collections? It was a moral victory to me, but since they remain on my credit report for seven years, does paying off the balance matter to lenders? Does it increase the amount of time that it stays on my credit report?

It won't increase the time but most likely it did drop your score.
I bet you wish you knew about PFD?

2. The foreclosure of my home in 1997 no longer shows up on my credit report (if it ever did because the report shows the mortgage as being paid off and doesn't mention a foreclosure). Will the mortgage lender find out about the foreclosure? How will that affect their decision in giving me a mortgage?

They won't know unless you tell them.
Message 2 of 2
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