“Paying Off Collection and Public Record Accounts That are on Your Credit Report”
If purchasing a home or refinancing is in your future, working with a knowledgeable mortgage broker should be the first thing you do. Once the credit report is obtained, allow them to guide you, but ask lots of questions, to make sure they know what they are talking about.
50% of the time, a collection account might be reported. Paying off the collection account will not automatically increase credit scores, as a matter of fact, it may do just the opposite. If a collection account is old, paying it off, most likely will lower the credit scores. You might think just the opposite, but its not the case.
Allow someone to advice you, that knows what they are doing. You might be advised, not to fix the problem, until the mortgage is obtained. This of course, is as long as the credit scores are sufficient to get the mortgage.
Public record items, MUST be paid off, prior to obtaining a mortgage. Public record items can include IRS, State Tax Liens, Property Tax Liens and Small Claims Court awards.
Not everyone understands about working with a credit report, seek help from someone that knows what they are doing.
Feel Free to communicate with me, if you have any questions.
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Joe Petrowsky, NMLS #6869
Right Trac Financial Group, Inc. NMLS #2709
110 Main St.
Manchester, Ct. 06042
Office: 860 647-7701 x116
Fax: 860 647-8940
Cell: 860 836-9294
Email: joe@righttracfg.com
Joe Petrowsky does not guarantee nor is in any way responsible for the accuracy of the information provided herein, and provides said information without warranties of any kind, either expressed or implied.
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Great advice for home buyer's seek the advice of an experienced mortgage or lender before deciding to purchase.
Joe, excellent advice. Collections can be a double edge sword some times. CHFA requires them to all be paid regardless of how old they are or reported last, except for medical collections. As you stated that can cause the scores to go down, so some times they can be caught between a rock and a hard place.
Joe: I never knew that paying off old collection accounts could have a negative impact on credit. It seems counterintuitive. I believe you, but why is that? Interesting post- Thanks for sharing!
Good afternoon Joe.
As always you give the best advice.
You do have a great knowledge.
Joe
Thanks for sharing your advise, it's very good information.
Good luck and success.
Lou Ludwig
Joe: If going for a mortgage, definitely don't start doing anything unless you have discussed it with someone like you to guide them. I have noticed that lenders do want certain negative items paid, yet will allow others to remain unpaid. Credit cards, for example, they want paid or get current.
Hi Joe. Fair Issac continues to be a mystery to me.