Mia Schultz

Hi, I'm a mortgage expert living in Illinois. I am also licensed to help with your home loan in many other States across the Country. Do you have mortgage questions? How can I help? View Profile

The Exact Right Way to Handle Bad Debts and Collections in Order to Qualify for a Home Loan

Hi, this is Mia Schultz. I am a mortgage therapist and I am here to talk to you today about collections on your credit report. Collections are a terrible thing for your score, and if you have them, you know what I mean. When we try to prepare you for purchasing your new home, we want to show your credit score in the best light possible.

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So when you come to me, we pull your report. I'm going to run you through my simulators, which are like on steroids compared to what you can get out there in the consumer world. And it's going to tell me exactly what steps we need to take in order to get your credit scores back in line. So I can use my simulators to remove a collection and see how many points we're actually going to get.

I can also use it to show if we paid off that collection, how many points we're going to get. And in most cases, paying off a collection to zero and leaving it on your credit report is no better for your score at all. Once a collection hits your report, the damage is done. And the only way to get those points back is to remove that collection from your report.

Paying it does not always work. Some of you may have heard of pay for deletion and that's the direction that we always want to take. Where we are going to advise you to go ahead and call that creditor and see if they will work with you on making a payment towards that debt. And you may even be able to negotiate it down a little bit in return for them to remove it from your credit report.

That's going to be the best option that you have in order to get those points back and get that score back up so that we can qualify you for a new mortgage. In some cases, while we're working on your credit report, we want you to pay very close attention to things that are coming to you in the mail.

Anytime a collection or a bill is going to hit collection, they're going to mail you a letter. And it says, "Hey, this has been turned over to a collection agency and you've got 30 days to take action on this." Now most people when they receive that letter, they look at it and say, "oh my gosh, I missed it. It's going to hit my credit report. I'm too late, it's over."

In reality that collector, that person that's now in charge and owns that debt is not going to hit your credit report with that collection until after those 30 days have passed. So look at that letter and say, this is my last chance before it hits my credit report. That's when you have to take action, because we don't want anything new happening to your credit while we're working on getting rid of all those old collections.

So, if you have any questions about getting collections removed from your credit report and how those will impact your scores, give me a call and I look forward to helping you. Talk to you soon.

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Mia Schultz NMLS # 217815 Mortgage Consultant 509 W. Old Northwest Hwy Suite 100A Barrington, IL 60010 (630) 593-0920 mia.schultz@findmywayhome.com

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About Mia Schultz

Hi, I'm a mortgage expert living in Illinois. I am also licensed to help with your home loan in many other States across the Country. Do you have mortgage questions? How can I help?