FHA Loan and Paid Collections?

[Anonymous]

hi!  I recently have been planning to start the mortgage process by feb-mar 2012.  I started to clean up my credit and paid off 5 of 6 collection accounts.  All the collections are over 2 years old except one.  I am paying this last one off in 2 weeks.  I paid the first 5 and my scores jumped, i opened two credit cards for building purposes, dont worry, both cards have a balance of $30 each and with high limits.  I know one score is 650, second is 629 and 605.  

What are the FHA guidlines for past collections if they are paid off?

[Anonymous]

If you're seeing score jumps based on paying off collections, it sounds like you're looking at FAKOs, aka non-FICO scores.

How old is the most recent collection?  When was the last time you had a late payment?

Your utilization would be better off if you had $0 reporting on all but one card and that small balance on only one.

You should consider sending goodwill letters to the collections to get them deleted - unpaid and paid collections are scored the same.  You should also consider doing a pay-for-delete with the remaining one.  Check out the Rebuilding boards. 

[Anonymous]

thanks for your reply, i was actually looking here at my fico, transunion and equifax both jumped 20-30 points into the mid 600's, also already had a mortgage company pull my info and they also stated what my scores are.  I will try for a pay for delete letter on the other one.

Thanks!

[DallasLoanGuy]

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@Anonymous wrote:

What are the FHA guidlines for past collections if they are paid off?

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worst case scenario you will have to write a letter of explanation.