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Paying off a collection?

Your FICO® Scores can impact your loan interest rates, terms, approvals and more.
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 3
Valued Contributor

Re: Paying off a collection?

As far as I know most lenders require all collections be paid prior to a loan approval.
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Valued Member

Re: Paying off a collection?

It’s an FHA loan not conventional.

Message 3 of 4
Valued 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.

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