Often less than people fear. A collection mostly hurts your buying power through what it does to your score, and the size of that hit varies wildly. The dollar amount of the collection rarely reduces your buying power directly. What matters is how the account drags your score and how the automated underwriting system reads that score: - A small collection on an otherwise clean file frequently gets effectively ignored. If removing it would only move a 710 up to a 745, it likely changes nothing about your eligibility or pricing. - If that same collection is pulling a 710 down to a 645, now it matters, because you have crossed into worse pricing tiers and possibly out of qualifying entirely. One caveat on the dollar amount: on FHA, when unpaid collection balances total more than $2,000, the underwriter counts 5% of those balances as a hypothetical monthly payment against your debt ratio, so large balances can pinch qualification even when the score holds up. One practical route is to call the collection agency and ask about a pay-for-deletion, where they remove the item from your file in exchange for payment. We have seen medical collections resolved this way. Before you pay anything, though, talk to your loan officer first. Paying off an old collection can reset the date of last activity to today and ding your score in the short term, even though it feels like progress. A lender can run a what-if analysis to estimate the score change before you spend a dollar. Score thresholds and how each program treats collections do change, so confirm current guidelines for your loan type.