My husband has a car loan that he defaulted on in 4/99 on EQ, 6/00 on TU, and 1/2002 on EX. This account should be reported as a repossession but the company is reporting it as a collection account. My question is as far as a home loan goes is it better off being reported as a collection than a repossession? I know neither a collection or repossession are good but humor me. We are considering an FHA loan and I know that they say that all collections have to be paid off, they don't mention anything about repossessions.
I don't really know how a repo would look to a mortgage broker, but I can tell you that you will find it totally impossible (or at really close to it) to get a mortgage with an unpaid (or open) collection on your credit report. I just went through this with an open collection that was on my report in error. I applied with several companies and was turned down before I was aware of the collection. I also talked to a number of other companies and they all told me the same thing. Either pay it or get it off the credit report, then they would be able to approve me. If it's a paid collection and your score is OK, then you might want to leave it there and see what happens. If it's an open collection then you'll have to do something about it. I think the general consensus here would be to first dispute it with the CRA's as not mine. If it doesn't go away, then dispute the status. HTH, Brett
