*Update-Closed!!* Supposed to close on the 31st and new collection being reported today

[Anonymous]

Hi all,
Longtime lurker here in need of some serious advice. As the title states I am on schedule to close on my first home on 5/31 with a FHA loan. I do not have the CTC yet as my LO just sent off a dispute letter to the CRA to remove a dispute remark (that I’ve called so many times to remove yet it is still appearing on TU and EQ) and then he will do a rapid rescore to remove this last lingering remark. Anyway, I just received a notification this morning that a new collection has been added to my report for $122 from FirstEnergy/MetEd.

I am beside myself as this collection is reporting as of 5/16/19 with this new collection agency (Penn Credit) although this same exact collection was reported on my file back in January by Associated Credit Services before I applied for a Mortgage Loan and the collection was deleted off my CRs back in March when I applied for the loan. So far, my EXP FICO dropped 11pts (631 to 620)and TU 5 points (616 to 611). How can another CA report this as a new collection? I have not received a letter from them at all in regards to this and of course since it’s Saturday they’re closed. What should I do? My lender has pulled my report on 5/15 (to check on dispute remarks) before this collection hit but I’m afraid he might pull it again to confirm the dispute remark was removed. I am panicking right now afraid my loan will be denied because of this and I am at the finish line. Any advice would be greatly appreciated!

[CreditInspired]

Hi OP and welcome to MyFICO

As soon as you can, whether it’s a

call or an email to your LO, let him know ASAP. The one thing LOs hate are surprises. Dont do anything about this collection until you speak to him and follow his advice to the letter. 

GL2U. 

[Anonymous]

Did you pay off the collection or was it just removed? It was probably transferred to a new CA if you didn’t pay it off. I would tell the LO immediately. It’s a tiny collection, and FHA allows you to close with a small collection like that... worst case, you may have to pay it at closing and your interest rate may go up, but they need to know ASAP.

[Anonymous]

Thank you guys for the advice. I was torn between telling my LO at all and just trying to get a PFD with the hope that perhaps my report wouldn’t be pulled again but I think the right thing to do as you guys have suggested is to let the LO know asap and take his advice from there. I truly hope this is nothing to worry about as I have come so far in this journey and hope to have my dream of becoming a homeowner come true in the next few days.

[homeloanexpert]

This is actually not that uncommon. Your LO should have told you from day 1, that you needed to resolve (which I recommend as it will not lower your scores) or remove all disputes in order to avoid your loan being downgraded to a Manually Underwritten loan. I just had one like yours, this last month. A new collection would not in itself be a deal killer, but since your LO is doing a correction/rapid rescore, that new collection will show and drop your score.  Worst case, if you scores plummet, if I were your LO, I would take the downgrade and move forward without the disputes being removed and use the first credit report. There are options my friend, but the worst thing you can do is NOT tell your LO.

Best wishes to you!

[Anonymous]

Thank you...you have put my mind at ease and I will be contacting my LO first thing Monday morning. I too figured that during the rapid rescore the new collection might pop up and drop my scores (which I still don’t know how it has affected my mortgage scores but my FICO scores have dropped -11 on EX and -5 on TU). It really is a pain that this has happened over the weekend—which gives me plenty of time to panic lol but I’m confident my LO will guide me the right direction on how to handle this. Thanks again!

[JVille]

How old is this collection, how much and did you already pay it off.... is it one you knew about?
You will need to write a letter of explaination regarding this.

[Anonymous]

The collection is a year old and occurred after I moved from PA to NJ and a final bill of $122 was sent to the previous address. I had paid what I owed prior to moving to be able to disconnect my service and thought all was good after speaking with MetEd. It wasn’t until the collection appeared on my credit report that I found out about it and I called MetEd to inquire and see if I could pay it through them. Their response was that I had a final bill mailed to the address and I never responded and it was sent to collections and that I would have to pay through CA. I contacted the CA to arrange a PFD but they stated “we don’t do that” and that it would still report but just show paid in full. So, I didn’t pay it since I knew that a paid in full would not help as it would still be reporting as a collection and still negatively affect my score.

Anyway, almost a month or so later after I contacted them the collection was completely removed from my reports (received an alert via MyFICO) so I applied for a mortgage loan. Now, it has resurfaced under a new CA several days before I’m supposed to close. In hindsight, I wish I would’ve just paid it off and I wouldn’t be dealing with this right now. I will see what the LO wants me to do and if he wants me to pay it off—which I will do immediately hopefully the new CA will accept a PFD. I will also have a LOX prepared just in case so thanks!

[Anonymous]

I’d suggest pulling a 3B report to see what it did to your mortgage scores. I had a new collection pop up (that I got removed via a settlement agreement with the OC since the entire thing was fraudulent) but it TANKED my mortgage scores. It took almost a year of aging for them to recover somewhat, and then getting it removed boosted them significantly. But you should know what you’re looking at... I didn’t realize the drops you posted weren’t mortgage scores.

[Anonymous]

Yes, my original post referenced my FICO scores and not my mortgage scores but I took your advice and paid to have my 3B report refreshed even though it just refreshed on 5/15. My mid score is now 4 points under the minimum required for FHA loan so now I have to figure out how to get those 4 points back before the 31st. I actually just paid down one of my cards to within 2% of utilization and the statement date closes on the 20th so I hope that helps.