A buyer calling us and saying “I paid off my collections and am now ready to buy a house” hurts my heart... I know what is about to happen.
Paying off all those collections to increase your score to buy a house in the short term IS NOT good and I'm going to tell you why.
If you want to buy a house now, need financing and have open collections DO NOT PAY THEM. Apply with a mortgage lender and let them advise you. The credit bureaus look at your collections as a potential mistake and score it as such. Once you pay them off, you basically admit they were yours and your score drops some. Over the long run it will build back up but in the short term while you are trying to get a mortgage, it will hurt.
Sounds stupid right? It is but there is nothing you or I can do about it. If you have open collections right now and are not in need of financing then pay those things off and move on with your life.
I Hope this helps you in you or your clients home buying journey.
Call me with any questions or concerns.
Have a RATE day!