     Kathy | Wednesday, January 26, 2000 - 05:25 pm 
I'm in the process of applying for a mortgage. I am not sure what my FICO score is buy my husbands is 545 (Mine should be a bit higher). The mortgage officer already pulled our reports. We have a ton of collections for tiny amounts ($20-30 each). They are all around 4 to 5 years old. I have tried negotiating with the creditors, but they won't deal for what I want. DELETION! One even told me I was better off not paying cause they will fall off in 2 year. The mortgage guy said that we needed to pay them off. Not a big deal cause we have the money to do so - but I am worried that it will bring our score down lower because it causes recent activity and will start the 7 year clock over. I've thought about calling them again and offering 50 cents on the dollar and 'paid' since I haven't been able to budge them in the past.
What do you think? Should I pay them. The mortgage company said that after I pay them and the credit bureaus are updated that I would be in a house within 90 days. I have been locked into a rate of 8.5% with 3% down. I've heard nothing but good things about their mortgages.
Feedback? Thanks. |
| kristy welsh - creditinfocenter.com | Sunday, January 30, 2000 - 08:58 am
Pay them. It will not start the clock over. And paid collections are better on your score than unpaid ones (though paying them won't imporve your score by 100 points). |
| Kristi F.Carreonandassociates.com | Sunday, January 30, 2000 - 09:59 am
I agree with Kristy. If none of the creditors will budge on negotiating neutral ratings or deletions in exchange for the payment then you have no choice but to pay them. Try every avenue to negotiate before you give in but if all fails and you are on time restraints then pay them. Remember, a paid charge off does not benefit you as much as a deletion,neutral or un-rated listing, but you cannot force a creditor to do anything.
Just a pointer though: I had a client who was dealing with Citibank for 3 years. They would not budge on the charge off. Finally we got them to agree to take it from an R-9 to an R-2 in exchange for payment. This was a good alternative to just paying it. The client was dead set about having a paid charge off on her credit. So it worked out for her. Also, watch for your states statute of limitations. If it is expired then use that as leverage before you give in. You may want to read a few books on Negotiation tactics. |
| Kathy | Sunday, January 30, 2000 - 05:57 pm
Thank you for your help. The mortgage company gave us a copy of the credit reports. My FICo was 575. He said we need to pay everything and get it up to 580. Some of the depts are easy to prove (son was batteling cancer at the time and we were both full time students). My husband is paying off student loans, we haven't been late on those and are hoping those will improve the score. There are some real weird things on there, like a loan my husband defaulted on more than 12 years ago, it says that the last date of activity was 9/95 - thats impossible the loan was charged off before we got married 11 years ago. It also has another loan listed five times, three times by the bank, once by the collection agency and another time under judgements granted to the collection agency. Having all of those removed should help my husbands score alone. Than there are several that we have no clue as to what they are. I suspect its a case of something being sold to five different people and being reported by each one.
Friday I ordered our reports from carreon and associates, hopefully that will help us get on the right track. The mortgage company stressed that everything has to show that we paid, or we will have to prove that we have paid it before we can make an offer on a house. I hope that within 6 months we can start making offers.
Thanks for your imput, we really do appreciate it. |
| Anonymous | Monday, January 31, 2000 - 05:59 am
That message gives me an idea for everyone to ponder. Consider two people (Jack and Jill) - both have 5 credit cards totalling about $ 30,000 in available credit. Jack becomes a compulsive gambler, takes maxes out the cards to go to the casinos, loses his job, now has $ 30,000 in bad debt. Jill gets cancer, has to go on (unpaid) leave of absence recover from cancer treatment, has $ 30,000 of unpaid medical bills that she can't pay.
Both people are out of work and have $ 30,000 of (bad) debt on their credit. Will either credit grantors or scoring models take into account that Jills debt was "not her fault" (i.e. she did not have a choice but to get the cancer treatment and incur the bills), or will both simply have ruined credit? Also, if Jill "paid" her medical bills on her credit cards, so now she (like Jack) has $ 30,000 of "bad" credit card debt, is it any "worse" for her? (In other words, are "some" bad debts "better" than others?) Finally, will putting the 100-word statement to the effect of "I had cancer treatment that is why I had to max out my credit cards" make any difference at all (If creditors simply look at the scores, how does a consumer statement EVER come into play?) Thanks. |
| Kathy | Monday, January 31, 2000 - 04:57 pm
From experience I can tell you that they don't give a damn. As soon as our insurance company found out they cancelled us (That was before the family medical leave bill that prevents an insurance company for cancelling you because of a diagnosis). One doctor told us to file bankruptsy because there was nothing he could do to get the hospital to except a payment plan.
As far as the CB and collection agencies go we are dead beats. They can think what they want to because if I had to do it all over again I would. We were at a point - bills go to collections so we could eat or We don't eat and they get paid. Thank God we are now in a situation to pay for them and the darn collection agencies dont even want to negotiate them. Friday one of them told me that I knew when I wrote the check to the grocery store that it wasn't going to clear. I agreed with her and said I was prepared to pay it and told her why we wrote it. She just yelling at me and told me I needed to pay the $50 in interest that had accured on the $14 check. I was willing to pay the face value plus $15 in service fees. Hell, would of been funner to gamble than watching my son fight for his life.
K. |
| Sean | Monday, January 31, 2000 - 05:17 pm
Why should it matter whether the defaults occurred because of gambling or because of cancer?
FICO scores aren't intended to be a judgement on a person's past. They are trying to predict the future. Since it's not possible to predict the future for any one person, they predict the future behavior of groups.
A person who has/had a gambling problem may have a gambling problem in the future. Or they may seek professional help through a 12-step program and put their life back in order.
Similarly a person who has suffered from cancer may go into remission and be fine. Or they may relapse to cancer in 2 years. Either way both the gambler and the cancer patient have potential future risk. |
