Charge Off

[BMW_328i]

Hello, When lenders look at my middle score, would they typically be concerned with collections or charge offs on the high and low scores? I have a charge off thats due to fall off in less than two years. The CO is listed on my high score. Please let me know your thoughts. Thanks in advance!

[dragontears]

---

@BMW_328i wrote:
Hello, When lenders look at my middle score, would they typically be concerned with collections or charge offs on the high and low scores? I have a charge off thats due to fall off in less than two years. The CO is listed on my high score. Please let me know your thoughts. Thanks in advance!

---

Can you define what you mean by "concerned with"?

Unpaid negative accounts might need to be included in DTI or they might not depending on the amount, type and lender policies. 

Mortgage lenders don't really care about paid negative accounts. 

[BMW_328i]

For example, if the lender uses my TU as my MMS, would I still have to payoff the CO that's listed on my EQ. The CO is $550 and is due to fall off in '23.

[Michizane]

---

@BMW_328i wrote:
For example, if the lender uses my TU as my MMS, would I still have to payoff the CO that's listed on my EQ. The CO is $550 and is due to fall off in '23.

---

TLDR version: The lender will see and use it regardless of it not being on your mid-score report. They may not require payment on it depending on your total debt, but if allowed it will be added to your DTI. This is assuming the charge off is not paid.

It depends on your loan and lender, as they might have a specific non-medical debt threshold where you need to pay off before getting approval. So check with your loan officer or be prepared to pay it. It will be better to get ahead of it, as you will most likely lose your ability to negotiate with your creditor once you apply (they will be able to tell that you are getting a mortgage and will probably not settle for less). 

Yes, the debt will be factored into your DTI or liabilities even if it is only on one report especially since their credit reports are a tri-merge (doesn't matter if it is not on you mid score report). They will have all your reporting for all bureaus merged together. They only use the mid-score as one of the factors to qualify you for the loan or rate. 

[homeloanexpert]

@BMW_328i

Other than having the typical effect on your score, I would totally disregard your charge offs. Depending on the loan program, collection accounts are handled in different ways. Conventional loans do not require they be paid off. With any government loan, the Loan Officer is required to hit you at 5% of the picture of balance and that payment will be added to your DTI