Paying a collection vs Charge off for mortgage score movement

[TJC1989]

Hello!

i have one medical collection left with a balance of $1650 and one charge off left with a balance of $1650. Both are updating every month. I am ultimately trying to get my mortgage score to go up, and my mortgage scores are stagnant and haven't moved up in months even though my FICO 8 keeps going up and up with my new and perfect cc payments. Something is suppressing my scores. 
Both will settle for 50% and the collection will delete. I have $800 to throw at one of them. Which would be more beneficial to pay? 

[Anonymous]

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@TJC1989 wrote:

Hello!

i have one medical collection left with a balance of $1650 and one charge off left with a balance of $1650. Both are updating every month. I am ultimately trying to get my mortgage score to go up, and my mortgage scores are stagnant and haven't moved up in months even though my FICO 8 keeps going up and up with my new and perfect cc payments. Something is suppressing my scores. 
Both will settle for 50% and the collection will delete. I have $800 to throw at one of them. Which would be more beneficial to pay? 

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The monthly charge off updates is suppressing your scores. The CA should not be updating monthly unless it's reporting incorrectly. I do not think you can get UW with an unpaid charge off or unpaid collection so you might have to take care of both before moving forward. 

Will the CO delete if you offer 100% payment?

[TJC1989]

No the charge off won't delete, it's with Bank of America. 
The lender that we are working with gave us a guideline to follow with suggestions to raise our scores. He suggested to leave these two things alone, but my scores aren't budging and I've taken care of the rest of his suggestions. 

[Anonymous]

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@TJC1989 wrote:

No the charge off won't delete, it's with Bank of America. 
The lender that we are working with gave us a guideline to follow with suggestions to raise our scores. He suggested to leave these two things alone, but my scores aren't budging and I've taken care of the rest of his suggestions. 

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Honestly, both. Each credit profile is different so will be hard to predict which will help you more.

My SO had his only CA drop from TU and EX (has a different CA on EQ) and he gained +43 (TU) and +27 (EX) from his only CA coming off. He still has 2 COs reporting that are unpaid. 

You do not mention who holds the CA and if they would be willing to do PFD. That would be hey, if they delete, you may likely see a boost.

The CO on the other hand if factored into revolving util (CC/LOC, etc), then paying it will likely lower your util. Depending on how many threshold you cross, you can gain points from that.

Also, once the mortgage app gets to the UW, they may likely want both paid. You are wanting to take out a very large amount of money by getting a mortgage and they usually don't want to see that you can't pay your debts.

I would do both.

Good luck!

[credit8502020]

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@TJC1989 wrote:

Hello!

i have one medical collection left with a balance of $1650 and one charge off left with a balance of $1650. Both are updating every month. I am ultimately trying to get my mortgage score to go up, and my mortgage scores are stagnant and haven't moved up in months even though my FICO 8 keeps going up and up with my new and perfect cc payments. Something is suppressing my scores. 
Both will settle for 50% and the collection will delete. I have $800 to throw at one of them. Which would be more beneficial to pay? 

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Did the lender you're working with run the "What If" Simulator? Although not all lenders have it, many lender have this resource to be able to specify the desired score and see what the system suggests as the best way to reach that score. Although it's not always right, many times it is. Many think that they have to pay off charge offs and that's just not always the case so I'm glad you spoke with him. If you decide to settle the charge off as a pay per delete, etc., I would mention it to your lender first and then see if when you delete that tradeline in the simulator, what it shows your new score will be. Once you get a letter from BOA, etc on their letterhead showing your new balance, etc. he may be able to do a rapid rescore and instead of waiting, you may see your score go up after the rescore is completed. 

I deal with these scenarios on a frequent basis. Lenders don't always know what's best for your credit and credit consultants do not always know what's best for lending so it's nice to get help from both sides to reach a helpful balance to help you win. What you do want to know is will the lender count a percentage of the charge off balance against your DTI if you do decide to not pay it off or make an arrangement, etc.