How Does A Paid Off House Affect Credit If Yours Is Not Very Good?
My husband's exwife really did a number on his credit. From credit cards, medical bills, forclosures, and identity theft. They did however have a house which was in her father's name and my husband's. I have been cleaning up his credit and I was wondering, since this was paid off in a fairly good amount of time, the house was worth over $100k, will it make his credit score go up a great deal or what kind of affect could it have on it? I got a letter from the bank stating it was paid offf and I sent it to the credit reporting agencies and they took it off the report but if it will benefit him I don[t want it removed. Please help me out on this. Hopefully I made sense. T hanks so much.
kellyntx
Credit scores are tricky beasts and nobody really knows the exact forumla. It is generally believed that paying off things might actually hurt your credit. Part of a credit score is to show that you know how to manage your money and how to make payments on time. Paying things off that were not derogeratory and closing accounts generally does not help your credit score.
Brenda
Well they really want to get you one way or another don't they. Thanks for the quick reply.
kelly
http://moneycentral.msn.com/content/CollegeandFamily/Moneyinyour20s/P73746.asp
Look at that article. It also has a link to Beefing up your Credit which says "Don’t close old, paid-off accounts"
I have seen several very good credit articles on moneycentral. Look around a bit while you are there
Thank you so much. I am definately going to go read that now. Thanks again for the advice.
Do not give up. There are many ways to improve credit score. Move ahead and don't look back. Remain determined to 'clean up' the negative items. Reduce CC debt!
Eric & Rosa
[addsig]
Thank you so much for the words of encouragement. It is a long procees and I am sure everyone out there knows how stressful and depressing it is but I am very persistant and will argue my rights. Thanks again for the support. That was really kind of you.
Kelly
I don't think having things paid off is bad. I carry almost no debt and have had a FICO close to 800.
I th ink that you want the history of the house being paid on time and paid off early etc.
Hello.
Real Estate loans are classified separately on your credit reports. If the house is paid off, it will certainly show creditors that you have more available funds since you aren't paying for housing.
The best things for good credit scores are payment history, length of open credit (maybe someone who trusts you can add you as an Authorized User to a good account that's been open a long time), amount of available credit and several other factors.
Having balances on accounts seems to help because it shows that you are responsible with your credit and can make payments. Why would a potential creditor want to open an account for you if you never allow them the opportunity to make money off of you because you pay your bills off every month?
Credit Boards .com is a good place to learn about your credit reports, how to clean them and other information like that.
Good Luck
Kellyntx,
If the house was never foreclosed on and it shows a good payment history, I myself, would leave it there.
6 months ago, I refinanced my house and so on my credit report the previous mortgage shows as being paid in full. Well guess what?
I have been making payments on the new one now and here we are six months later and it isn't even showing up yet.
Guess what happened to my credit score?
It went down..
Gotta love our credit scoring system. There are certainly good aspects but there are things that should and need to be changed.
Anyway, that is my story.
Like previously stated, credit scoring is something we'll never quite figure all out but your best bet is to educate yourself as much as you can on the subject, take that, and put it to use!
Best of Luck!
HBG
Brandon[ Edited by HouseBuyerGuy on Date 02/24/2004 ]
Thanks again for all the responses. I am going to have the house put back on there because it was paid in full and they always made their payments. I have learned a lot from here and I am also going to try the other sites everyone has given me.
You are right HouseBuyerGuy, we wil probably never be able to pinpoint how they read our credit and such. They love making us sweat.
kellyntx