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i have collection on my credit I want to buy a house with in 4 to 6 months. Do I pay or settle.

What is going to be best to increase my score and help me buy a home. Do I pay the bigger balances and settle the lower dollar accounts? I have heard settling will hurt. Can I get them off the credit report after paid or settled?
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February 07 2011 - Parma
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Answers (6)

Best Answer
If you are looking for the best way to increase your score, paying your revolving credit card balances down will increase your score the quickest.  Once a collection hits your credit report the damage is done. If a collection hits your credit and it drops it 30 points, paying it off the next day will not put those 30 points back.  You should defiantly pay back any collection, but don't expect it to return your credit back to what it was. As time goes on that collection will matter less and less, and your score will return to what it was.

Hope this helps

Paul
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February 08 2011
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paul,

the stuff in collections is medical does that make a difference? and they are less then 2 yrs old.   
so does it make a difference if it paid in full or a settlement is made. should we just save the money we have to add to the down payment ?
because our revolving credit is good.  we do have money saved for a down payment that not a problem.   We have had agent tell us that they will not take us out till we are pre approved due to the lower score.  So just trying to find someone that is willing to help assist in the process has been difficult. once they know that your score is lower they seem to thinking you got the plague or something.   We just want to make sure that we do everything correctly to get in a home soon we get a bunch of different answers and just want to make solid decision going forward.
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February 08 2011
Talk to a mortgage lender and they will tell you exactly what you personally have to do in order to get your credit history corrected so you can buy a house in 4 to 6 months.
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February 08 2011
It is always best to pay in full,  However you can get an approval with leaving the collections open.  It depends on what they are.  My advise is to get with a loan officer that can run a credit score analysis through their credit bereau.  It will tell youexactly what to do and how muct it will improve your score.

The Collections are part of you credit history now.   You might be better off paying down accounts that are current and have high balances.

Down payment will also help you get approved.  The more you can put down the better off you will be.

Joe T.
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February 07 2011
To expand on Wetdawgs, don't plan on buying a home in 4 to 6 months.

If you just had 60 and 90 late payments that have already been paid (not an active account) just these blots on your record is going to make it extremely difficult or extremely expensive to get a traditional loan.

They're not just going to look at your credit score, they're going to ask why it takes so long for you to pay your bills.
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February 07 2011
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It sounds like you have several collections on your credit report.   Pay them all off and adjust your home buying timeline.   

After you've paid or settled, the reports will be changed to "paid in full" or whatever other resolution occurs.  The purpose of the report is to show your true credit history, and these collections are part of it.  It wouldn't be fair to potential lenders to have them removed (and can't be done in most cases, despite all the commercials on TV.)
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February 07 2011
 
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