To Pay Or Not To Pay
As a follow-up to a recent blog post,Your
Credit and Your Home Purchase, I want to share a tip from a credit
restoration company I know…
“As Shakespeare almost put it, To Pay Or Not To Pay, that
is the question:
When it comes to your credit scores, paying the right
account or the wrong account can make a massive difference in your credit
scores. Let’s focus on what not to pay. One would assume when paying off bad
debts on your credit report, the credit scores would always increase. However
“one” is not always correct. Paying off items like your utility collection, or
your cell phone collection will most likely decrease your scores. This is despite
the popular belief that having a $0 balance on your collection accounts must be
better than owing money. Balances on collections are irrelevant, for example
you could have a one million dollar medical collection or a one dollar medical
collection and if everything else is the same the scores would also be the
same. The reason why your scores generally decrease when a payment is made is
because by making a payment you reactivate the account causing it to report as
new again. This is shown as the ‘DLA’ on a credit report. This ‘DLA’ or ‘Date
of Last Activity’ represents the weight of the account AND the seven year
statute until the item will fall off naturally (which is a whole other problem,
but we will save that for another day).
The reasoning behind this madness is that the algorithms
that calculate scores cannot discriminate against wealthier/poorer individuals.
So the fact that a wealthier person has the ability to pay off a certain dollar
amount more easily than a poorer person would be discriminatory on algorithm
calculation.”
Confused? Contact us and we’ll put you in touch with a
reliable lender who can answer your questions.
Teri Isner is the team leader of Orlando Avenue Top Team and has
been a Realtor for over 24 years. Teri has distinguished herself as a leader in
the Orlando FL real estate market. Teri assists buyers looking for Orlando
FL real estate for sale and aggressively markets Orlando FL homes for
sale.
You deserve professional real estate service! You obtain
the best results with Teri Isner plus you benefit from her marketing skills,
experience and ability to network with other REALTORS®. Your job gets done
pleasantly and efficiently. You are able to make important decisions easily
with fast, accurate information from Teri. The Orlando Avenue Top Team handles
the details and follow-up that are important to the success of your
transaction.
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Labels: credit score, mortgage, Orlando avenue top team, teri isner
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