Credit Tips For My Borrowers (Stuff You NEED to Know)

Mortgage Banker with SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171)

What affects your credit score: Mike in Tucson, Mortgage LenderCredit tips for my borrowers, by Mike in Tucson, mortgage lender

The question:  "I want to improve my credit.  Should I pay off charge-offs and collections?"

How the system works:

Take a look at that yellow piece of the credit pie on the right.  Length of credit history is 15% of your overall credit score.

Among the data tracked by the Credit Bureaus is this little gem:  "date of last activity."  It shows on your credit report as DLA.

Let's say that you've come to me for a purchase money mortgage because your agent referred you.  Let's say further that you did some dumb things six years ago when you were in college, and you know that a few derogatory accounts are going to show up from that time.

The old beater you had in college was repossessed by the car dealer whose billboard still reads "NO CREDIT?  NO PROBLEM!  The dealer sold the car at auction, and sent you a bill for the difference.  The bill was for $580.  You didn't pay it.  The car dealer sold the debt to a collection agency.

Your credit report today says "DLA 11/2004."  If you do nothing, this derogatory collection account will fall off your credit report next November, after 7 years.  That's if you do nothing.

But you're making good money now working for Raytheon as an engineer, and you think to yourself "I can pay that.  I think I'd better get that paid and off my credit report before I go see the mortgage guy..."

You get out the checkbook, call the collection company and pay the $580.

What that means to you:

  • Derogatory accounts can be reported for seven years from the date of last activity.  What would have fallen off in 2011 will now be reported until 2017.  Oops!
  • You paid a debt, and yet it's more than likely that your credit score will go down in the near term.

If, on the other hand, you pay off a collection or charge-off that is 12 to 24 months old, it's likely that your score will improve!


If you're my borrower, please call me before you do anything.  Let's talk it over, and improve your chances of qualifying for that home you want to buy from your favorite agent!


I'm Mike in Tucson, your preferred Tucson Mortgage Lender.

NMLS #223495

SUNSTREET MORTGAGE llc ~ Correspondent Mortgage Bank
Offices (AZ) Mesa, Tucson, Nogales, and Albuquerque, NM.



Re-Bloggged 8 times:

Re-Blogged By Re-Blogged At
  1. Emmary Simpson Tierra Antigua Realty - Tucson AZ 11/23/2010 07:36 PM
  2. Margaret Woda 11/24/2010 08:54 AM
  3. Christine R. Sutherland 11/24/2010 09:12 AM
  4. Julia Odom 11/24/2010 11:30 AM
  5. Bob & Leilani Souza 11/24/2010 03:48 PM
  6. Erica Ramus 11/24/2010 04:22 PM
  7. Curt Baumgarth 11/25/2010 10:44 PM
  8. Marilyn Boudreaux 11/30/2010 11:09 PM
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the graph to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Mortgage / Finance
Agent Dad
Realtors Needing the services of the Lending Powers
The Ninety-ninth Percentile
True Mortgage Professionals
credit tips
mike in tucson
tucson mortgage
sunstreet mortgage
credit score
improve my credit score

Comments 31 New Comment

Anonymous #28

Thanks for sharing this... credit is more important than so many realize!

November 25, 2010 11:45 PM
Tony Marriott
Associate Broker, REALTOR
Haven Express @ Keller Williams Arizona Realty

Sage advice from one of the masters of the mortgage market - thanks for the tips!

November 26, 2010 11:17 AM
Diane Williams

Mike thanks for sharing this excellent advice and tips. In today's economy we never know what might happen to cause some damage to our credit report. 

November 27, 2010 06:18 AM
Teral McDowell
Residential Sales in Collin County, Texas
Keller Williams Central

A gMerry Christmasood one, Mike, and I like your pie too.

November 28, 2010 06:36 PM
Dave Sullivan
The Real Story on Your Credit Score - TheCreditGuy

Nice Job Mike but I am disagree with paying any collection more that a month old...  any longer and your score will dip...  but thanks for the info..

January 06, 2013 05:56 PM

Mike Jones

Mike Jones NMLS 223495
Ask me a question
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the truck to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Additional Information

var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "' type='text/javascript'%3E%3C/script%3E")); try { var pageTracker = _gat._getTracker("UA-6448457-1"); pageTracker._trackPageview(); } catch(err) {}

sc_project=3256774; sc_invisible=0; sc_partition=35; sc_security="0f26bdb9";
free web stats