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CC charge off and getting a mortgage

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Margaritapizza11
Established Member

CC charge off and getting a mortgage

CC charge off and getting a mortgage

Hello,

I have a charge off from 2019 for $1600 (unpaid) from Dscvr card. My credit is 680 and I have no collections and have made all overall payments for all accounts on time (over 70) since 2019. My overall utilization is very low. I  am trying to get a mortgage by June  and am wondering if this will hold me back? From research I've done and from what I've heard, it shouldn't make a huge impact on the decision but just thought I'd check here. 

Note: There was a collection for this account that was removed from all 3  bureaus. Why would it be removed and this CO remain? 

6 REPLIES 6
Mortgage-Specialist
Established Contributor

Re: CC charge off and getting a mortgage

This charge off should not impact approval at all. As you may have read through other posts today, some lenders may require you to pay it off but it is their own specific over reach and not pertaining to actual Fannie/Freddie guidelines. It is not required to be paid off

Message 2 of 7
CreditFun
Regular Contributor

Re: CC charge off and getting a mortgage

Alternate point of view to consider (I like previous points made):

 

Guidelines are changing by the minute, what may be today is not tomorrow.

 

June is a long ways away in this current climate.

 

My suggestion would be to have a mortgage broker do a soft pull and run scenarios on how to maximize your credit score between now and then to increase your chances of an automated approval.

 

Further, I would have cash on hand to pay off debt just in case.

 

Message 3 of 7
Mortgage-Specialist
Established Contributor

Re: CC charge off and getting a mortgage

Unfortunately, soft credit pulls don't allow for the use of the credit simulator. It also doesn't allow the loan to be run through the automated underwriting system (AUS) so essentially a soft pull doesn't allow for a true pre-approval. 

Message 4 of 7
VALoanMaster
Valued Contributor

Re: CC charge off and getting a mortgage


@Margaritapizza11 wrote:
CC charge off and getting a mortgage

Hello,

I have a charge off from 2019 for $1600 (unpaid) from Dscvr card. My credit is 680 and I have no collections and have made all overall payments for all accounts on time (over 70) since 2019. My overall utilization is very low. I  am trying to get a mortgage by June  and am wondering if this will hold me back? From research I've done and from what I've heard, it shouldn't make a huge impact on the decision but just thought I'd check here. 

Note: There was a collection for this account that was removed from all 3  bureaus. Why would it be removed and this CO remain? 


Is 680 your mortgage score?

What type of mortgage do plan on applying for, FHA, VA, USDA or conventional?

Did you dispute the collection to get it removed? If so, it's possible the collection will reappear on your credit in the future. 

 

I agree with @CreditFun to a degree. You should apply with a lender and have them run credit scenarios to see what can be done to improve your scores. 

 

I just ran a credit simulator for a client this morning and by zeroing out 1 charge off, they would pick up 12 points. That's with a significantly lower score than you so you should see better results.

 

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 5 of 7
Margaritapizza11
Established Member

Re: CC charge off and getting a mortgage

Good morning,

Yes 680 is the Fico 2 from EXPERIAN. I did not dispute the collection, it was just removed from each bureau out of no where (this was 8 months ago). We plan on getting a converntial fha or a usda. 

Message 6 of 7
VALoanMaster
Valued Contributor

Re: CC charge off and getting a mortgage


@Margaritapizza11 wrote:

Good morning,

Yes 680 is the Fico 2 from EXPERIAN. I did not dispute the collection, it was just removed from each bureau out of no where (this was 8 months ago). We plan on getting a converntial fha or a usda. 


It's really odd the collection agency removed the account from all 3 bureaus on their own.

Is 680 your mid score?

If so, you should be fine going FHA and USDA. On a conventional loan, 680 is doable but it's been tougher to get automated underwriting approvals lately and the rate hits and PMI will result in a higher monthly payment. If you want to go conventional, you'll want to increase your scores.

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 7 of 7
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