Will having negative items completely removed from my credit score improve it…

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    • #203622
      Anonymous
      Inactive

      …noticeably? It is actually my husband’s credit score. During college he messed his credit up pretty bad, it is at a 588. We are trying to get a mortgage and since we need both our income to qualify we need to bring his up. He has three outstanding overdue bills adding up to around $3500. The collectors have offered to completely remove the account from his credit score if we pay by the end of September. I know just having the balances changed to 0 does not do much but would having the items removed help? He just needs a 600.



    • #270833
      Anonymous
      Inactive

      Are these for charged-off credit card debts? If so, the collection agencies can only remove what they report. The original credit card company will continue to report their charge-off separately and this cannot be removed until 7 years.
      – If these are not defaulted credit card debts and you can get a written agreement that they’ll completely remove the items prior to payment, then take the offer.
      – Get all terms of any settlement deal you reach with debt collectors IN WRITING BEFORE you give them your money. This letter should state the settlement amount and that the account will be settled/paid in full upon receipt of this amount from you. Never accept settlement deals over the phone that are not backed up in written terms. If you don’t, the debt collectors will deny that any settlement was ever made once they get your “settlement” money and will come back demanding more money from you
      – NEVER give out your checking account/bank routing numbers to debt collectors for making electronic debit payments. Pay only by USPS money orders.

    • #428319
      Anonymous
      Inactive

      First with a 500 credit score you will not be getting a house by October and second for you to close on a mortgage the charge offs/collections will have to be paid before or at closing.

      You need to work on your credit, a LOT. Paying them does very little but the lender will require it.

    • #428320
      Anonymous
      Inactive

      You will not get a mortgage in 2011 if your credit score is in the 500’s now. Period. You will have to have the charge offs paid.

    • #428321
      Anonymous
      Inactive

      How old is the charge off and how often is it updated? You can actually hurt your score in the short term, paying charge offs, unless you get the creditor to agree to remove the debt if you pay it. That is the optimal solution. Otherwise, if it is a few years old and never updated, wait until a lender tells you to pay it. Then have them pay it at closing for you. Paying it now would hurt your credit. If it’s fairly new, or if they update it occasionally, then yes, pay it off. In this case, it would still be hurting your credit a lot and paying it off will stop it from continuing to hurt your credit.

      No, those items are not included in your debt to income ratio. Basically it is items that will be on your report – minimum credit card payments, loan payments, your new mortgage payment which is equal to mortgage payment (principal and interest) + mortgage insurance (if you put down less than 20%) + monthly homeowner’s insurance + monthly property tax. The last two items, they take the yearly amount, divide by 12, and a little each month to the escrow account so the money is there when the bank needs to pay those items for you.

      Agree, unless you have a lot of credit card debt (maxed out cards) or other items you can clean up, you will have a tough time getting to 620 by Oct 2011. But I would not say it’s impossible. Do you also have 3 credit lines open and reporting positively (no lates, etc) for the past 12 months? That will be important. Good luck!

    • #428322
      Anonymous
      Inactive

      I recommend paying the charge offs simply because it demonstrates to a potential lender that you are a more reliable credit risk. You might consider settling the debt for a lesser amount as well, but make sure you get any agreement in writing.

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