Posted on: 11th May, 2009 03:10 pm
Hi,
I just received mortgage approval from a major bank at a very good rate. However, my ratios are extremely tight and the loans officer wasn't sure if I'd be approved.
When I received the commitment letter back from the bank, in the list of conditions, one of the conditions it listed was the following:
"Lender to receive an acceptable explanation of the credit report inquires evidencing no new debt. Inquiries were made by <collection>.â€
I defaulted on a credit card four years ago - in some chaos after having my wallet stollen. It isn't for a large amount and I can pay it. But, I was scared to deal with the collection agencies - I don't trust them.
What is the best way to fix this problem without destroying my mortgage (and pending house sale)?
What do I say to the collection agency to ensure the derogatory item is deleted and how do I get a deletion letter?
What do I say to the lender? This is the most important question.
Other than this problem, I have no debt, my credit is excellent (very high score - over 750). Also, I can't do an FHA mortgage.
Also, will calling the collection agency somehow confirm the debt exists and further damage my credit report?
I just received mortgage approval from a major bank at a very good rate. However, my ratios are extremely tight and the loans officer wasn't sure if I'd be approved.
When I received the commitment letter back from the bank, in the list of conditions, one of the conditions it listed was the following:
"Lender to receive an acceptable explanation of the credit report inquires evidencing no new debt. Inquiries were made by <collection>.â€
I defaulted on a credit card four years ago - in some chaos after having my wallet stollen. It isn't for a large amount and I can pay it. But, I was scared to deal with the collection agencies - I don't trust them.
What is the best way to fix this problem without destroying my mortgage (and pending house sale)?
What do I say to the collection agency to ensure the derogatory item is deleted and how do I get a deletion letter?
What do I say to the lender? This is the most important question.
Other than this problem, I have no debt, my credit is excellent (very high score - over 750). Also, I can't do an FHA mortgage.
Also, will calling the collection agency somehow confirm the debt exists and further damage my credit report?
Hi sarahvallieres,
You have mentioned that the amount was not large and you'll be able to pay them off. In such a case, I would suggest you to contact the collection agency and pay off the debt, When you pay off the debt, you can request the collection agency to report the payments to credit bureau. As far as I know, any negative item will remain on your credit report for 7 years. You won't be able to remove it from your credit report before that. However, if you make the payments, it will have a positive effect on your credit report.
You can tell you lender the original reason for not paying the debt. Once you pay off the debt, inform the lender about it. Calling the collection agency will not damage your credit report further.
Thanks
You have mentioned that the amount was not large and you'll be able to pay them off. In such a case, I would suggest you to contact the collection agency and pay off the debt, When you pay off the debt, you can request the collection agency to report the payments to credit bureau. As far as I know, any negative item will remain on your credit report for 7 years. You won't be able to remove it from your credit report before that. However, if you make the payments, it will have a positive effect on your credit report.
You can tell you lender the original reason for not paying the debt. Once you pay off the debt, inform the lender about it. Calling the collection agency will not damage your credit report further.
Thanks