Friend in FL looking for 1st lien HELOC

[Michael Kowal]

Loan amount 30-50k, full doc, ficos 620, 640, and 670. Will pay off the only mortgage and increase the line so she has some credit available (LTV < 50%). We have been working on improving her credit for the last month, one $300 medical charge off from Feb 2010 is the only remaining derogatory trade line.

My understanding is that once she contacts the collection company it restarts the clock and the collection account will stay on the report; also if she disputes it with the Bureaus we can get it removed temporarily but it will typically show up again once the collection agency responds to the dispute.  Is there any way of knowing when the tradeline will be removed if we take no action?

It seems that getting the collection company to agree to report the account paid as agreed would be more valuable than getting them to reduce the collection amount by $100 or so, and we should address this to get her credit up before starting the application rather than wait for the tradeline to expire.  Would it be advisable for her to be proactive in addressing this? Any feedback would be appreciated.