My credit card balance was $26K in Dec 05 with AMEX. I tried to put it on a debt consolidation plan but AMEX refused and instead sent it to their collections company. Does it make sense for me to try to pay the balance off since it's already reported as going to collections on my credit reports. Will it improve my FICO score if I pay it off with the collections company? I want to buy a house next year. How will morgage lenders view it? I'll have a 30% down payment (gift) by the time I'm ready to do it. Will that help?
2006-06-14 06:44:00 · 3 answers · asked by lpreese 1 in Business & Finance ➔ Personal Finance
AMEX did the same thing to me years ago. They call the shots. I cant tell you if you should pay it but I can tell you it will haunt you longer than the 7 years because it will continue to be "sold" and thus will stay on forever.
2006-06-14 06:49:03 · answer #1 · answered by educated guess 5 · 0⤊ 1⤋
For that much money in debt, you probably won't get a loan (unfortunately). Since it is reported, make a deal with the collection company. If they take off the negative mark then you will make them payments. They do have that right and if they tell you they don't then they are lying to you.
Either way, the collection will stay on your credit report for 7 years of deliquency. If you don't pay it it will still come off. If you pay it, still will come off but you are paying money into something that is hurting you either way. I would check your Statue of Limitations also because after a certain amount of years, legally the collection company/Amex can't sue you for the amount. Right now they can and probably will because it is a HIGH balance due.
I would definitely see if they can have that mark taken off your credit report and then start paying them...you and the collection company will be happy because they are getting paid and it won't ruin your credit.
If you don't believe me about the collection company being able to take OFF your credit report, look up the Fair Credit Reporting Act, it is all there.
Good Luck!
2006-06-14 06:51:04 · answer #2 · answered by jessigirl00781 5 · 0⤊ 0⤋
Well of course you should pay off the balance. You borrowed the money and you owe it to the credit card company. What is questionable about that? (end moral rant)
Who is going to give you a mortgage next year if you cant make payments on $26k now?
Having your down payment be a gift is not a positive thing when trying to get a loan.
2006-06-14 08:51:56 · answer #3 · answered by Custody1 3 · 0⤊ 0⤋