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Last week, I started the home prequalification process. My lender ran my credit and my scores are decent (665,693,694).The problem I face is 1 of my reports (Equifax) has an old debt of $4,536 which is due to expire in January still listed. My lender wants me to settle the debt before closing. My question, is will settling reset the clock on the debt. Also, how much should I offer to the collection company that now owns the debt?
Although, I could wait until the debt falls off I really want to take advantage of the no down payment program I may be qualified for, as well as, the good interest rates which I am not sure will last much longer. Any advice would be appericate. PLEASE HELP!
The debt does not "expire" based either on expiration of the SOL or credit report exclusion.
It remains as legitimate debt until discharged, either by its payment, BK, or cancellation by the creditor.
Expiration of SOL removes the ability of the creditor to obtain a court judgment ordering its payment, and permitting attachment of assets or garnishment.
Credit report exclusion shields knowledge of the delinquent debt by excluding it from credit reports issued by a CRA.
Payment of the debt, either in full or by settlement for less, does not affect the credit report exclusion period of any derogs reported by a creditor or debt collector.
Exclusion of monthly delinquencies, charge-offs, and collections are based only on the date of delinquency or the DOFD.
@Anonymous wrote:Last week, I started the home prequalification process. My lender ran my credit and my scores are decent (665,693,694).The problem I face is 1 of my reports (Equifax) has an old debt of $4,536 which is due to expire in January still listed. My lender wants me to settle the debt before closing. My question, is will settling reset the clock on the debt. Also, how much should I offer to the collection company that now owns the debt?
Although, I could wait until the debt falls off I really want to take advantage of the no down payment program I may be qualified for, as well as, the good interest rates which I am not sure will last much longer. Any advice would be appericate. PLEASE HELP!
Patience Grasshoppa! I would wait until the debt falls off your CR. Chances are with the collection/derog. gone it will increase your credit score and might help you get the prequal and a better rate. The market is not going to change much in a few months so don't feel like you should rush when buying a home. GL
Its a collection not a judgement. I am thinking about contacting the agency to dicuss "settling" providing they remove it from my report. Thoughts?
I did. Equifax the ONLY report its listed on will not budge!!!!