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Question for the Money Doctors

Question submitted on May 4, 2012.


I would really like to buy a house in two years. My focus right now is on my credit. In the next year I have a few collections that will be falling off of my report. I have 2 collections that will expire in 2016. They are for very large amounts. My question is, in my quest to get the best mortgage and save enough down payment, should I pay off the old debt and let it stay on my credit or will the it not affect me so much since i plan on buying in 2014/2015? Should I use the money I planned to use to pay off the debt for my down payment? Thanks in advance.


Credit history generally remains on your credit report for seven  years, but it can remain longer until the statute of limitations runs out.  It seems that the negative history you describe will be available on your credit report when you are planning to apply for a mortgage.  You might want to consult with a reputable credit counselor to try to restructure your old debt and set up a payment plan that will allow you to liquidate your old debt while saving for your down payment.  It may be possiblel to negotiate a lower payment amount directly with the collection agency.   You should also make sure that you are paying all your current debts promptly. 

For further information, you can refer to the Federal Trade Commission website or for debt payoff strategies, see this article:

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