Paying off collections, negative impact?? HELP!!!!

[Anonymous]

Hello!

First time poster here and would love to get some input from this community and help guide me down a path that will ultimately get me to my desired goal of owning my first home.

Here's a little bit of background and the current situation that I am in.  I went to apply for a new home mortgage in late March and was denied due to the accounts that I currently have in collection.  Loan officer basically explained that I would need to get these taken care of before qualifying for a new loan.  Current credit score is 619.

At the moment I currently have 5 accounts in collection right now.

- Midwest Recovery Systems $1,367     This was from an ambulence ride that was not requested.  I was assaulted and was unresponsive thus the call was made to take me by ambulence.  The suspect was never found nor was there a police report made.

- Jefferson Capital Systems $563     Old Verizon Wireless account

- The Stark Collection Agency $405     Old Veridian account

-  I C System $145     Old utility bill

- Online Information Services $56     Old utility bill

I currently have the funds available to pay these old debts off completely clean.  My question is, will paying these debts off leave a negative impact on my score?  Will paying off these debts raise my score enough so the bank will give me what I am asking for?  Remember my goal is to purchase my first home and get my family into something we can live in for many years to come.

Thank you for your help!!!

[simplegirl]

Hello and welcome to the forums. If you get a pay for delete than it can help your Fico score and if they are reporting monthly it would stop dragging down your Fico score. If you settle on the accounts that would only be important to an underwriter. Good Luck.!

[gdale6]

Anything updating monthly is keeping your Fico depressed so you want to settle those trying the PFD. Anything not updating I would wait to settle until after the mortgage pull since you will need a 620 middle score to qualify. I see one is medical these are the easiest to get off your CR, here are the steps that you should follow to address them:

1. Call the OC and see if insurance can be billed, (or-rebilled), collections ultimately paid by insurance get removed per new rules that came from CRAs settlement with 22 state AGs. If not then
2. see if you qualify for Charity Care, if not then
3.  ask that they recall the collection in exchange for full payment
4. Send the reporting CA a PFD offer
5. Google the HIPAA Process and contact its creator for help, this process cannot be discussed in any forum of myFico.

[RobertEG]

It is not the paying per se that can negatively impact your score, it is waiting an addition time to pay, and thus letting the period since initial delinquency become longer, that effects your scoring.

Just as reporting of a 90-late after a prior 60-late extends the reported period since initial delinquency, when you pay the collection, it was delinquent up to the date paid, so when it reports change of current status from delinquenct/collection to Paid, it affects the reported period since overall delinquency.  

Once paid, any further updated reporting will already have a current status of non-delinquency, so it wont extend the period since initial delinquency.