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Do not pay off old collection accounts: It will plummet your credit scores
You will qualify with unpaid collection accounts for a mortgage loan. Do not pay off old collection accounts with unpaid balances. If you pay off an old collection account that is dormant, it will re-activate your dormant credit status and it will drop your credit scores. Let sleeping dogs lie and leave older collection accounts alone until the statute of limitations runs out.


FHA implemented new collection account guidelines for FHA LOANS. There are new FHA collection guidelines for non-medical collection accounts as well as medical collection accounts.


Many home buyers feel that they do not qualify for a mortgage loan until they have paid off their collection accounts and have a zero balance. This is not the case. FHA does not require a mortgage loan applicant to pay off a collection account with an unpaid balance. Just the opposite is true. If you pay off an old collection account balance, what this does is re-activate the dormant account and once you re-activate it, it will plummet your credit scores and your statute of limitations period starts all over again. Please read this article for more details



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