How will this effect my credit score?

Question

Too make a long story short, i cosigned for someone for a car and it got repo'ed. The finance company sold the car, charged off the account and gave the account to a law firm because it was a left over balance. I made payment arrangement with the lawyers, and eventually paid the balance/account off.I know the damage is already done to my credit because of the repo. How will paying off this account impact my credit score? Will it raise it, lower it, or will it stay the same? Some people have told me it will do nothing to my credit score, others have said it may have a little effect on my credit because it will lower my debt to credit ratio. What do you think?

Answer 1

"Then fight all three of the credit bureaus and show them that it has been paid in full and to have them remove it from your credit report."

This person does not know credit issues very well. The info is correct and will remain on your credit report for 7 years plus 6 months from the date of first delinquency. You COULD have tried to negotiate a delete for the payment but they have no incentive to have it removed from your reports now.

Again the credit bureaus do not remove something for you just because you paid it off.

Answer 2

Unfortunately a repo will affect your credit score. What you should do is get a letter from the finance company that states that you paid off the loan in full, so should you have problems getting credit in the future you have the letter.

My father's house went into foreclosure, however, before it went to court my father sold the house and paid off the house, however, because the mortgage was in my mothers name also (they divorced) it shows up on her credit even though he doesn't own the house anymore and every time she has to apply for a loan she has to show a letter from the bank showing that the house is paid off and there is no foreclosure.

The best thing to do is pull your credit and look to see what your score is. Then fight all three of the credit bureaus and show them that it has been paid in full and to have them remove it from your credit report. Once it's removed they cannot put it back on.

Good luck

Answer 3

Having bad debt marked paid is better than having it outstanding. It should help your score but don't expect a big increase. As that repo gets older, the impact on your score will lessen.

Have you considered going after the person you co-signed for? Now that you've paid off their screw up, you can take 'em to small claims and sue for what you had to pay to settle -- up to the small claims max in your state.

Even if you never actually see the money, it would throw a judgment on your friends credit report which would be there for 10 years (and could be renewed). Just a thought.

Answer 4

It is always a positive impact when you pay off a bad debt both because it lowers your debt to credit ratio and because you made good on the debt. That vendor will quit reporting negatively and over time, you will do better when you are seeking credit.