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    DKMTR's Avatar
    DKMTR Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Feb 3, 2007, 09:01 PM
    Paying off old collections
    My husband and I are purchasing a new home and when my husband's credit report was pulled he owed several small collection amounts. For us to get the better interest rate on our mortgage he needs to raise his FICO score by 10 points. Will paying off all those small amounts in full differ from settling it for a smaller amount?

    Does settling differ from paying in full score wise?

    Thanks in Advance.
    wynelle's Avatar
    wynelle Posts: 184, Reputation: 21
    Junior Member
    		  
    #2

    Feb 4, 2007, 06:09 PM
    Settling is different from paying in full. Some collection agencies will indicate on your credit report "Settled" some will indicate "Paid in Full."

    Lenders do not want to see "Settled" on a credit report, because it shows that the potential borrower doesn't always repay their loans.

    Regardless of whether your husband pays in full or settles, it is going to be a negative factor on his credit report. I recommend he do one or the other as soon as possible.
    bretb's Avatar
    bretb Posts: 32, Reputation: 8
    Junior Member
    		  
    #3

    Feb 7, 2007, 10:59 PM
    Try to DISPUTE them first. They may just go away.

    Then, if there are any that don't, work out a settlement with the debt holder wherein they completely REMOVE the account from your report once the settlement amount is paid. This should boost his score by quite a bit more than 10 points.

    Either way, I'd hold off on that house and address that credit first.
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