cancel
Showing results for 
Search instead for 
Did you mean: 

Paying off a collection?

Highlighted
Valued Member

Paying off a collection?

Hello guys

I need to raise my middle Fico 29 points to get a downpayment assistance program. I have paid a bunch of old cc collections about $12,000 in total of collection paid and saw some nice point jumps 60-90 points on all mortgage scores.

I have one left from Toyota financial , for around $3269 and am wondering if paying is going to help my scores? I’ve been doing some Reading online and saw a lot of posts saying that all the mortgage scoring models look at unpaid collections as a big factor.

Pay or nay? $3269 is a lot of money to pay on top of my downpayment , and I’d likely need to get a loan ( which I’m approved for) to settle this. Toyota is also reporting it as a CO every month.
3 REPLIES
Valued Contributor

Re: Paying off a collection?

As far as I know most lenders require all collections be paid prior to a loan approval.
Penfed gold
Penfed promise
NFCU cash rewards
NFCU Amex
Nfcu Platinum

Citi simplicity
Discover
Amex BCE
Amex Magnet
Amex SPG
Wayfair
Care credit
Macys
Amazon store card
Walmart store card
Marvel card
FICO EXP 735 TU 729 EQ 724
Message 2 of 4
Valued Member

Re: Paying off a collection?

It’s an FHA loan not conventional.

Message 3 of 4
Established Contributor

Re: Paying off a collection?


@sausa wrote:

It’s an FHA loan not conventional.


If Toyota reports every month & it's reporting as a charge off then you should see a pretty decent increase in your scores if you pay it off.

The good news is, you should be able to settle it for substantially less than the reported balance & still have a positive impact on your scores if it is a charge off.

VA Mortgage Expert. Mortgage Banker lending in All 50 States.
VA, FHA, USDA. Jumbo, Conventional.
CAIVRS Expert.
Message 4 of 4