Credit Score dropped over 100 points after Collection refresh?

[Seansoulo]

I am scheduled to close on a property in seven days. I went to my lender a couple of years ago(2009) to apply for a refi on a rehab property. I didn't qualify because I had several unpaid collections and my scores were at that time were EX- 601/ EQ- 589/ TU 555. This was when 620 would still get you an FHA loan. Ultimately, I had to sell that property and did so. My lender told me what to do to raise my scores and I followed all the steps, from getting collections paid off and negotiating to have them removed from my credit, to obtaining a couple of secured credt cards and paying on time. There ws only one collection that was an old private student loan that was charged-off back in 2005 in the amount of $9K. It was sent to a colelction agency and the balance ended up being like $23K.

Fast forward to Feb. 2011 and I find a house I plan to buy. I have a credit monitoring service so I've watched my scores continually get better. I go see the same lender and they pull my credit: EX- 655/ EQ- 652/ TU 625. The new FHA minimum is 640 and I qualified to buy the home. My offer is accepted and we go into escrow. My lender includes the old student loan collection on my credit report and says they can exlude it because it's over five years old and scheduled to fall off early 2012.The loan processor questions the student loan but then speaks to her underwriter and my loan officer who tell her what to do. She tells me that she contacted the bureaus to have a duplicate item removed pertaining to that old collection, and the original reports the balance as $0. (WHEW!!!!)

My file goes thru underwriting and I'm approved and ready to head to the closing dept.. In lieu of some repairs, the owner agreed to lower the sales price $1800 last week, so my file goes back thru underwriting for approval on the lowered sales price. The loan processor says I should be back in the closing dept. today or Monday. Now, I get home yesterday and my new quarterly credit report is available thru my credit monitoring service and it shows that that old (private...not government) student loan collection has refreshed and added a statement to show "was charged off," and all of a sudden my EQ- 652/ TU 625 drops to EQ- 544/ TU 559!!!!! More than 100 points on my Equifax report, after all the hard work of improving my scores. My EQ and TU scores are now worse than they were before I even went to see the lender back in 2009. The collection is not reported on my EX, so there was no change. There is not a late, new credit line, increase, inquiry or anything on my report besides that "refresh!!!!" This seems illegal, when adding a statement can lower a score over 100 points!! It seems my lender awoke this sleeping giant and it's got me on pins and needles now.

I'm wondering will this affect my loan and closing, when just a few weeks ago I was approved and last week I was thru underwriting? It's not a debt that the lender did not know about or one that is new, it was simply refreshed when they requested the change. I am scheduled to close next Friday and the lender has not said anything yet, to make me think it will not. I am hoping this is something they can work out since it seems like something they caused. Will they pull my credit again right before or the day of closing and then say we can't close because of that "refresh" on my credit report? Any info would be appreciated.

[llecs]

Try pulling your two FICO scores from here to see where you are. As of a couple of years ago, it became impossible to get all 3 FICO scores together via one website. The only place you can get all 3 FICO scores together is from your lender. If you are using a service that provides all 3 scores, then the scores that you are seeing are not FICO scores and that can explain the difference in points between your service and what the lender pulled. In other words, your FICO scores may not have changed at all.

[Seansoulo]

I certainly hope that is the case and my scores have not changed. I also noticed that my scores being reported by the credit monitoring company were lower than those my lender pulled. My lender actually said those services are regularly inaccurate. (Fingers crossed). Thanks.

[llecs]

If you mention the service you are using, I can probably tell you the type of non-FICO scores (FAKOs) they are using.

[Seansoulo]

I think I found my answer here in an older post: (B of A Privacy Assist). This makes me feel much better.

 Moderator
llecs
Posts: 20,324
Registered: 08-04-2007
Re: Privacy Assist Premier

02-26-2009 03:30 AM


Ignore the FAKO scores. These can go up when your FICO could go down and vice versa. My FAKO scores have also been as little as 5 points off from my FICO and as high as 100 points off when comparing the same scores. Come think of it, I had one FAKO score that was around 415 (TU-related) when my FICO was around 670 at the same time on the same day.

[Seansoulo]

It was actually YOUR old post that gave me the info I needed. Thanks llecs.

[cdtotten]

Just for informational purposes, typically if someone has an open collection on their account and the CA sees you are applying for a mortgage, they will refresh the reporting to get your attention. Has become common practice.

[Seansoulo]

Thanks. But I hope it doesn't drop my score 100+ points. They are well outside the FCRA statute of limitations for collection attmepts at this point as its gonna fall off in less than a year. Just hope there are no snags in my mortgage because of this.

[mauve]

Have you pulled your scores from here?  EQ should be the same as your lender's from here.  Google myfico discount codes to save some cash.

[Anonymous]

To OP....There is no statue of limitations for collections...only taking you to court for them.  If the SL is still within the 7 year timeframe, it can be reported as a collection still.  I am sure in this situation any lender would see it as an old debt and not worry about the recent lates rule, any credi t hits are another thing.  You still have to meet minimum requirements.

Also, as said, it is likely that 2 things are happening.  This collection did get reported as a charge off which will have lowered your score and likely make you inelligible for the loan if they repull credit, and the score differential is probably not 100 points, but between the drop and the FAKOS you are seeing 100 point difference.  In the end, I would call my LO and be upfront about it with them.  Most cases, they pull credit and do a VOE at closing (this used to not be so common but is pretty standard anymore).  If you call them and it has popped up, there may be some ways they can help you around it or advice to help you through it they can offer.  If you do nto tell them and they pull it up, then you will be SOL as they tend to not like it when people do not reveal changes that occur and they find out anyway.