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FHA impossible with charge offs?

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FHA impossible with charge offs?

Hi. My report has gotten a lot better and my scores are now in FHA range. I have most of the bad stuff off my report and now have only 2 charge offs from 2011/2012 and they are unpaid. One is for $700 and one $1200 and I am afraid to do anything as it will hurt my score. Will these charge offs stop my FHA qualification? I have tried reading the FHA thread above about charge off rules, but it has an error link on it now so no access.

Message 1 of 5
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Frequent Contributor

Re: FHA impossible with charge offs?

Because your charge offs are less than $2000 you don't have to pay them in order to qualify for an FHA Loan.

 

Message 2 of 5
Established Contributor

Re: FHA impossible with charge offs?


@trc1962 wrote:

Hi. My report has gotten a lot better and my scores are now in FHA range. I have most of the bad stuff off my report and now have only 2 charge offs from 2011/2012 and they are unpaid. One is for $700 and one $1200 and I am afraid to do anything as it will hurt my score. Will these charge offs stop my FHA qualification? I have tried reading the FHA thread above about charge off rules, but it has an error link on it now so no access.


...your collection accounts total is less than $2000 ...afaik all you'll have to do is provide a written explanation to the FHA/loan underwriter for them ...worst case is that the underwiter may not accept your explanation 

 

...paying the CAs will not hurt your score unless you set up a payment plan and then default ...if you pay them off in a lump sum the DOFD won't reset ...FICO does not score paid/unpaid CAs differently

 

...if you can get a PFD before you pay them off, it will actually help your scores, probably by more than a few points

 

...that said, the SOL may not have expired so contacting the CAs could result in a judgement if you refuse to pay ...thats an FHA no no

 

...the best move if you can afford it is for you to offer a PFD on the CAs and get them removed altogether 

 

...whatever you do, don't apply for a mortgage if you are going to engage the CAs ...once they see a mortgage app on your file, you're toast

 

 


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Message 3 of 5
Established Contributor

Re: FHA impossible with charge offs?

Banks have their own requirements and may require it to be paid off. Best to ask a loan officer where yku want to apply. I closed with a $900 disputed collection with no questions asked about it... but my credit file was otherwise perfect.

Paying them off puts new activity on the account and has been reported in these forums to sometimes hurt your credit score. Ask on the rebuilding forum for advi ce.
Message 4 of 5
Established Contributor

Re: FHA impossible with charge offs?

As far as paying charge offs is concerned...

The only way it will hurt your score is if the account is not being updated monthly by the OC. If it isn't, and then you pay it, it will look like a brand new CO to FICO when it updates to reflect your payment. If the OC is reporting monthtly, I don't see it hurting yor score by paying it off.

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