One of the three credit agencies says I have a collection on my account.

Home Forums Purchase Program One of the three credit agencies says I have a collection on my account.

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  • #79228
    anniski
    Participant

    I disputed it and they said it belongs to me. The other credit bureaus don’t list it. Do I still have to pay collection that to qualify for naca even if the other bureaus don’t have it listed?

    #79230
    Nelsont
    Member

    Naca pulls a tri-merge meaning it’s a special report that combines equifax transunion and experian. It shows everything. As long as one of the bureaus is reporting then you are responsible.

    For what it’s worth each of the 3 bureaus have different reporting frequencies. It’s rare for something to just not or never show up on all 3 reports. It is very likely 3 to 6 months from now it will show up on the other 2.

    #79232
    anniski
    Participant

    I see, thank you. Does NACA require those accounts to be deleted before we can qualify? In other words; if I were to pay it off today (and show proof that i paid it off) would that be good enough or do we have to wait until the bureaus delete it from the reports before NACA considers it paid off?

    #79233
    Nelsont
    Member

    If it erroneous or fraudulent you need to provide a letter from the bureau on letterhead (no email, no voicemail, no text message – must be mailed and postmarked directly from the bureau) stating the item was removed from your report. You should be getting this letter anyway. This may take some time. But in any event just saying you are in dispute is not enough you must have proof it is gone.

    If the item is a collection and it is correct then you need to pay it off completely. You cannot be qualified until your balance is zero. You will get a letter stating the balance was paid in complete – you will need to provide this in order to qualify. The letter is nearly identical to one you will receive from a bank for paying off your car loan. If you cannot pay all at once you will need to enter an approved payment plan (unless it’s an IRS collection). You will still need to pay it off completely. Provide the payment plan letter you receive. You will need to make at least 3 payments on the plan per the plan’s schedule.

    If the collection was last reported more than 24 months ago (not when it was opened) and there has been no activity then you will just a need a letter of explanation.

    If you have a charge off then you need to wait 24 months from the date of the charge off (not from the date the item appeared on your report) and write a letter of explanation.

    The collections and charge offs will not fall off your account for up to 10 years. Sometimes 5 sometimes 7 so don’t worry about that. As long as they are closed and you have physical documented evidence you are fine.

    #79234
    anniski
    Participant

    thank you so much for your help!

    #79235
    anniski
    Participant

    one more question: it’s a little complicated, but lets say my debt is 1,000$. if i were to pay it off all at once and then NOT save any extra in my bank account every month would that (paying chunk of debt) count toward saving at least 200 a month? or do i have to actually space it out (chip away at it – 400 a month for 3 months) for NACA to recognize it as “saving” (paying off debt) every month? hopefully this makes sense.

    i guess my question is: if i pay off a collection (lets say 400 a month for 3 months) does that count as “saving” money? or does my bank account literally have to reflect a savings being built up.

    • This reply was modified 2 months ago by anniski.
    #79237
    Nelsont
    Member

    No. Payment shock cannot be averaged. It’s a minimum that must be met every month until you close on your house. The only exception is if you encounter a one time emergency that prevents you from saving in which case you would need a letter of explanation. Saving extra one month only means you have more money in your bank account.

    #79239
    Kristijay
    Participant

    Qualification workbook pg. 32 under the heading Charge offs And Collections “Any charge off or collection that happened more than 24 months ago rarely need to be paid off and only require a letter of explanation to address any current balance.”
    Also medical collections are not required to be paid off. I would defer to your MC as to whether you need to pay off the collections. I would also advise against disputing accurate collections. It can cause more damage than good.

    #79240
    anniski
    Participant

    Okay, thank you!

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