? for AcidSniper

[Anonymous]

Sense you work as a mortgage broker and with another large financial instituion , maybe you can help shed some light on a past debate we have had on this board in regards to accounts that were sent to collections on what is better   Paid  Vs.  Settled. when regarding future potential lenders opion on these.

I have always subscribed to the thought that if you have the means to pay it off in full to do so. I've always tend to believ that Paid looks better than Settled.   I do understand that some people's financial position, it just maybe better to settle.   

But when you do a manual review of someone's Credit Report, how do you view  Paid Vs. Settled. 

a.)  Paid is better?

b.)  It really doesn't matter as long as the collection/charge off is resolved

Thanks in advance for and experts opinion.

[Anonymous]

In all honesty they hold the same weight.  Tomatao Tomahto...   In all honesty when looking at a credit bureau report, a settled and paid debt is the same, it's a debt that was satisfied with the company giving the line to the consumer.

Affecting the FICO side of the house I couldn't tell you, but as far as the substantiallity of which is better it really doesn't matter...  The big concern when it comes to settled vs paid debts is that typically a settled debt is one that has 30/60/90/120+ lates on it.  Now those will have an effect on your financing power, but just the simple paid/settled title will not.  We look at the history of the account, not how it's listed (with exception to repo/collection/etc.)

[Anonymous]

Thanks for the answer.   I'm glad I was wrong in this case.   having inside knowledge of cases like this can help people save hundreds if not thousands of dollars.

So I humbly will eat crow.   Thanks AcidSniper

[Anonymous]

Don't forget the hot sauce

No worries, there are a lot of differing opinions as to how things are looked at, but I know for a fact coming from the largest worldwide financial institution (hope that gives it away without me saying) that is how it is viewed here, as well as by our contracted sub prime companies we have partnerships with.

[Anonymous]

I agree with the response from Acidsniper but would like to take a bit further. Some lenders will require a borrower to pay unpaid collections prior to allowing them financing. Knowing that paying a collection can have a negative affect on your score, this can really mess up some financing opportunities.

If you are in this boat and you are refinancing, pay the collection off through escrow at close. The lender will be happy because the collection is paid. You will be happy because your credit does not drop at the last second and hence you get the better rate. Remember. lenders will pull credit at the very last minute and if you are on the border, just a single point can make a huge difference.

[Anonymous]

^^ Absolutely, good point...

[Tuscani]

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boheme wrote:

I agree with the response from Acidsniper but would like to take a bit further. Some lenders will require a borrower to pay unpaid collections prior to allowing them financing. Knowing that paying a collection can have a negative affect on your score, this can really mess up some financing opportunities.

If you are in this boat and you are refinancing, pay the collection off through escrow at close. The lender will be happy because the collection is paid. You will be happy because your credit does not drop at the last second and hence you get the better rate. Remember. lenders will pull credit at the very last minute and if you are on the border, just a single point can make a huge difference.

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You could show proof you paid without asking for a rapid rescore.

[Anonymous]

You could do that, but most lenders will still re-pull credit prior to releasing funds for a loan. If you pay it off, and your score drops, it could be the difference between getting a loan and getting rejected at the last minute.

[Anonymous]

Pretty much what I suspected...thanks AcidSniper. I'm not going to worry about paying those collections and charge-offs then.