PAY OFF YOUR DEBTS DOESN’T ALWAYS HELP YOUR CREDIT SCORE: 3CALoan
We all know that our credit score will go up if we pay off our debt. We all believe in this because it makes sense logically. If you pay off your debt, you will owe less and also you will be able to take your other obligations.
Sometimes paying off a debt will affect your credit score in a negative way. It means sometimes your credit score will decrease if you pay off your debt.
How pay off your debt leads to decrease your credit score? We will explain in this article
When there is a judgment or a collection account on your credit report, then the impact of this on your credit score will directly relate to the account’s age. It means for how many months or years you are having that account. When you will do any transaction or there is any other activity on those accounts, then they will treat your account as if they are new ones.
Collection
For example, if Ryan has an account and has a collection account for $200 on a medical bill. And this bill was not paid by his insurance then it first hit his credit score in January 2016. That means two years ago. It will not affect his credit score as long as he had other current accounts since then. If he decided to pay that collection account then it would affect his credit score in a negative way because the credit scoring program would treat it the same way it did when it was reported.
So the question arrives here, how can you pay off these account without affecting your credit score in the negative?
It has many ways but the simplest way we have found is you before you pay off your debt, you should make a deal with the creditor. If your creditor will agree to remove that collection account in writing upon the receipt of payment. Then you will possibly find a way to scrape to together enough money to pay that collection account.
Judgments
Judgments are different from collection accounts. You will find difficult to remove it from your credit report because they are a matter of public record. It is a simple matter of getting proof about the judgment was satisfied because these accounts don’t get updated to show that they were paid.
Keep the proof with you that you had paid that judgment until it will be removed from your credit report. Also, supply that information when needed. Don’t wait for the time your credit report will get corrected to show you have paid that judgment unless you absolutely have to.
FINAL THOUGHTS
You can use these simple steps to maintain your credit score good. Don’t rush the process and avoid the common mistakes. If you ever need any type of loan till your score recover, you can contact us at (818) 322-5626 or (818) 3CA-Loan today! Not sure where to get started with investor financing? Contact us and we’ll be happy to answer any questions! We offer multiple different alternative financing options. You have to be careful and avoid making any costly mistakes. Our competitive rates, efficient services, and talented team can help ease the process of the home loan. We help our customers every step of the way. We prioritize informing and educating our clients about the home buying process. Our client’s happiness and confidence upon closing a deal reflect our excellent quality services.
3CALoan local mortgage broker provides no tax return home loan which is also called no tax return, without tax return, without tax return, private hard money home loan, private hard money loans, bank statement home loan, bank statement loan, equity loan and many more. If you still have any doubt, you can contact us anytime. Our specialists will be in touch promptly to answer your questions. We will run you through the details of home loans and hold your hand throughout the process. We only have one aim of helping people first.
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