FICO impact to paid collection - timeline

[olehammer]

Hey All!  Need your thoughts on the following scenarios and what might be better for FICO score impact.  My concern is that the CA will continue to update the record making it look current each month.  If i PIF they will stop updating and I can work on GW letter.

Scenario 1:  Pay open collection 6 months prior to mortage app.  Push for removal with GW campaign. 

Scenario 2:  Continue to work on PFD, if unable to secure, PIF just prior to mortgage app.

Further Details:

Have an open collection with Diversified Consultants (DCI), ARGH!, for $293.  Based on the removal date on Experian it's first report date is Aug-2012.  Looking to start home loan process in 6-12 months.  

Given the general forum concensus DCI is very difficult to obtain a PFD for.  I've sent several requests but most have been ignored and one came back just validating the debt.   Given the whatever mortage company we go with will likely require it to be paid should I pay it now and go the GW path or should I spend the next 6 months going after a PIF PFD?   I'm thinking time since PIF may be beneficial if I'm not able to secure a PFD.

Thanks in advance!

[Anonymous]

I have a pif collection from 2013 that had the status of opened for whatever reason, so I disputed and the ca changed to close.  The update to the account dropped my scores more.  Then it was deleted off tu and ex and i got 74 and 77 points respectively.  Eq still has it and when I sent the follow up letter for the hipaa program they again updated the status to paid (which I thought it already was "paid") and my fico08 score dropped again from 629 to 618.

[jamie123]

As long as you owe them money you have leverage to do a PFD. You are completely at their mercy with the GW process. I would suggest working for a PFD until 2 months before the mortgage app and then PIF if they won't do a PFD.

Come up with a good sob story of why you need the PFD and it might work. Tell them you want to buy a house so your elderly sick mother can live with you and you can take care of her. The collection is preventing you from obtaining a mortgage.

I just made that up but if you notice, I didn't mention money or credit score in that story at all. Your story should be the same.

[olehammer]

That's a really great point @jamie123! Time to up the anty.

[Revelate]

Not certain playing that card will work out, will backfire badly if the rep you get knows anything about the mortgage market.  

That said, what you probably should do is start figuring out what lender you may wish to pursue a mortgage with, as some will allow you to pay off the collection at closing or as a condition for after you've already rate locked, and as such don't have to worry about FICO's doing something silly on the last update date or what not.