I have about a 650 rating. The only unpaid debt on my report is for a judgement in the amount of $500. Will paying this off raise my score very much. Lenders will still see that I had the judgement, so I am not sure how much of an effect that will have. I was told that by paying it off I could probably qualify for a home loan.
2007-07-06 08:49:43 · 9 answers · asked by miklo 2 in Business & Finance ➔ Credit
I agree with the posters on here. It will look better on your report if it's paid. But your score will not raise dramatically. The only way for your score to rise would be after the judgement stops reporting on your credit which could take up to 10 years from the date of the judgement
2007-07-06 08:59:46 · answer #1 · answered by Anonymous · 1⤊ 0⤋
It depends. On how old the judgement is, and it's only for $500.
The chances are your score won't increase significantly.
In either case, the judgement will still show up on your credit reports.
Now, if it's an older judgement (say a couple years or so), I would just ignore it, and see what rate I qualified for. That way, the $500 could be used towards closing costs or downpayment, etc.
If it's a more recent judgement, I would pay it off if you have the extra cash.
My rating was about 670 when I first bought my house with my wife and I had a bankruptcy from 6 years prior to that time. And the rate we paid on interest was about 1% - 1.25% higher than what the average rate was at the time. Once we worked through that time, and made sure that every single bill was paid on time, especially the mortgage, we qualified for a lower rate, and we refinanced.
At the time, we started out with almost an 8% rate for a 30 year mortgage (after putting 20% down on the house), and we refinanced about 1 year after to a 6.25% rate on a 30 year mortgage. We refinanced one last time just about 2 years ago to a 5.5% rate for 15 years. In November 2007, we reach the "halfway" point. To me, that is where more than half my payment is going toward paying down the principle, and less is going toward interest.
If you'd like, I have an easy to use program (although a lot are available on the web), which shows the effect of having a 15 year mortgage, instead of 30, or 40 (or egads 50) year mortgages.
2007-07-06 09:07:41 · answer #2 · answered by Chris C 7 · 0⤊ 0⤋
As stated, it will have only a minor effect to your credit score.
But financing_loans is correct, the main problem is when you apply for a mortgage or large loan. The loan officer will pull your full report and see the judgment, and many times they want those paid off.
In most other cases, all they will pull is your credit score and judge you by that. So unless you are looking toward a large loan I wouldn't worry about it. The judgment is there on your report and will not disappear when it's paid. After the 10 year period it will be removed....even if they go back to renew the judgment. It can not be posted for longer then 10 years on your credit reports.
2007-07-06 09:23:16 · answer #3 · answered by Anonymous · 0⤊ 0⤋
With that score you will qualify for a home right now. The judgement will have to be paid because it will fog the title. But that can be done at closing.
If you are purchasing a home you can add it into your home cost and have the seller pay it for you. You dont need to pay it before. You will not get denied for that. It will just be a requirement that you pay it at closing.
2007-07-06 08:54:09 · answer #4 · answered by financing_loans 6 · 0⤊ 0⤋
Probably won't raise it much, but it will reduce your debt-to-income ratio by $500. Certainly you'd do well to pay it off, and you could indeed be borderline for a great-interest loan, only needing a few extra pointe higher to qualify, in which case even those few points would help.
2007-07-06 08:54:29 · answer #5 · answered by Vangorn2000 6 · 0⤊ 0⤋
If you pay off the judgement, it will still show that you had a judgement but it will say it is satisfied. It should help your credit rating and it will also show that you are taking care of your debts.
2007-07-06 08:55:21 · answer #6 · answered by Katherine B 1 · 1⤊ 0⤋
Yes and it would make your credit report look good.. It does take time for your score to change..
2007-07-06 09:57:00 · answer #7 · answered by shorty21 5 · 0⤊ 0⤋
Yes it will raise it, but the judgment will remain. It looks MUCH better to have it paid off though, so creditors are more willing to lend to you. Who wants to lend money to someone who may not pay them back?
2007-07-06 08:55:57 · answer #8 · answered by Anonymous · 0⤊ 0⤋
I also have the same question
2016-08-24 07:53:11 · answer #9 · answered by Anonymous · 0⤊ 0⤋