Paying collection prior to applying for mortgage

ute2008 · #1 (**permalink**) 09-22-2008, 01:56 AM

How bad it is to pay a collection 2-3 months prior to buying a house? Will it help me if I get a secure card to compensate a decline in my credit score by making my account active (paying collection)?

Please help me understand my ups and downs in paying this legitimate collection account.

choldheide · #2 (**permalink**) 09-22-2008, 01:45 PM

ute2008,
It all depends on how bad your credit is. If your credit is terrible and you are just paying off collections and you were missing payments on other debts lenders will not look at all of that to favrabley.
However if you can establish good credit and show the lenders that you can pay off your debt this would be step in the right direction. Though if you are planning to take out an unconventional loan ( loans for people with less than perfect credit) it may be tough to do. With higher lending resrictions and possible higher down payments this could be hard for you to achieve at this time.

My suggestion right now would be to ...

clear up any current debt
save money either in a 401k plan, savings account, a CD something you can show the lenders that you are saving money.
don't miss any payments this is litrally the kiss of death when it comes to lending.

Hope this helps. If you want more help send me an email.

Frugal_Jay · #3 (**permalink**) 09-23-2008, 07:32 PM

is it a medical debt?

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