Been rebuilding but progress too slow. Tips?

[nmk94]

I've been on these boards since November of 2017. In that time, I've learned a lot and done various things to rehab my credit, but they only went up so much thanks to some big derogs like COs and collections (my sig shows the progress). I was content to just let things age off, but my wife and I have to relocate due to work, which means buying a new home. So I need to get my score up considerably in the next 6 months.

Here's the thing: Everything I've read about COs and collections seems to indicate that even if you pay them off, they still appear on your report. This is why I didn't bother to address them. That, and they were very large in number, and I was focused on paying what I could, including back taxes (which are all paid).

So if COs and collections keep appearing on your report, what use is there in paying them off? How can I get my score up?

One CO in particular is nagging. Unlike everything else, it still reports. Even 03/20 it shows up on the report as a CO. It was a CC that was maxed out, and reports at 100% util. I believe it also gets reported as part of my overall utilization, dragging me down to 61%. I have three open CCs, all with low balances that I pay on time, but this one is so much bigger than the limit on all of them that it keeps my total util high.

If I tackle this one, will it help significantly? Will a mortgage company still just look at all those derogs and say "sorry"? 

I have more questions but will leave it at that for now.

Any help is greatly appreciated. TY!

[AllZero]

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@nmk94 wrote:

One CO in particular is nagging. Unlike everything else, it still reports. Even 03/20 it shows up on the report as a CO. It was a CC that was maxed out, and reports at 100% util. I believe it also gets reported as part of my overall utilization, dragging me down to 61%.

For that CO, are you able to PFD, Settle for less? Is the debt owed manageable? What is the DoFD Date of First Delinquency?

[AllZero]

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[nmk94]

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@AllZero wrote:

For that CO, are you able to PFD, Settle for less? Is the debt owed manageable? What is the DoFD Date of First Delinquency?

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It's big, over $10k. I could pay in full, but it would take a huge chunk out of my savings, and with the uncertainty around the economy due to COVID I don't want to deplete my funds that much. I may be able to settle for less. Would that take it off my report? Would that look good to a mortgage lender or would it be a lot of money lost for a small bump? The DoFD is 01/31/2016.

[AllZero]

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@nmk94 wrote:

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@AllZero wrote:

For that CO, are you able to PFD, Settle for less? Is the debt owed manageable? What is the DoFD Date of First Delinquency?

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It's big, over $10k. I could pay in full, but it would take a huge chunk out of my savings, and with the uncertainty around the economy due to COVID I don't want to deplete my funds that much. I may be able to settle for less. Would that take it off my report? Would that look good to a mortgage lender or would it be a lot of money lost for a small bump? The DoFD is 01/31/2016.

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That is a big debt. Best to speak with a loan officer for course of action.

Yes, addressing your CO will look good. Especially a debt of that size. As you stated, the CO is updating monthly, it's suppressing your scores. Your options are: wait for the 7 year removal date, Pay In Full, or Settle for Less.

It's a little over 4 years. I'm not sure where you reside. You might want to check if it is in or out of the SOL Statute Of Limitation. If it's beyond, then you might have a chance to settle for less.

I don't know who is your original creditor. I can not answer that question if they will remove it.

Since you are on time line, you need to address that CO one way or another.

[Anonymous]

I am by no means an expert, but in my experience paying those charge offs to keep them from reporting monthly and dragging your utilization down is worthwhile. Also, some collection agencies are deleting as a matter of policy after payment, even if the payment is a discount. Midland will if the trade line is more than 2 years old. Portfolio Recovery will. Perhaps the agencies have finally realized they will be more successful getting people to pay when they get the gift of a deletion in exchange. Otherwise, just do all the great tips on these forums. Total utilization as low as possible AND individual utilizations low too. They both matter. AZEO method. There are some things that only time can heal, but there are some other things that can be done in the meantime. Also, I would guess most mortgage lenders will likely require some or all of those things to be paid off before they will agree to loan money anyway. Good luck on your endeavors!

[OmarGB9]

Yes, paying COs off helps tremendously because they are considered maxed out accounts which as you noted, drags your utilization (and scores) down. COs that are paid will unfortunately remain on your reports in most cases, but you can always try to GW the OCs for removal.

Paying CAs is worthwhile if they do PFD, which not all do, but there are several that do. Midland, Jefferson Capital, and Portfolio Recovery Associates are some of those that PFD, whether PIF or settled. Even if the CA that owns your debts doesn't do PFD though, the loan officer will more than likely tell you to pay your collections regardless. 

[hpotterfan77]

I am a mortgage underwriter and I can tell you this...if you are intending to apply for a mortgage, an underwriter/lender is going to require you pay any delinquent debt including collections/chargeoffs that are over $250.00 or an aggregate of $2000.00 in order for you to close.  If you pay them off, we may ask for an explanation but they won't usually be an issue if your score is high enough to qualify.  Hope this helps you.

[nmk94]

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@hpotterfan77 wrote:

I am a mortgage underwriter and I can tell you this...if you are intending to apply for a mortgage, an underwriter/lender is going to require you pay any delinquent debt including collections/chargeoffs

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Thank you for the info. What if they are settled but not paid in full?

[hpotterfan77]

Generally when you settle, it will report settled but it will still be a zero balance and that's what matters.