Check this out, soon I will have enough funds to either payoff my 1 year old car loan $16,765.00 (Currently Paying), Sallie May Loans (Currently Paying) $15,000 or my Old Debt, $16,500.00 which some of it are collection accounts, charge-offs, etc (Some will fall off next year)...My goal here is to increase my score which can allow me to purchase a home in the near future but at the same time I am not sure if I should have alot of debt or less debt.. Which one should have more affect on my score?
As of 3/17/08 - TU 619 / EQ 666 / Ex 624 As of 4/17/08 -TU 621 / EQ 671 / Ex 626 As of 6/07/08 - TU 627/ EQ 688 / EQ 644
I'm no expert...but I would imagine that paying off the old debt would be most beneficial....especially if you can send PTD letters and get them to agree. Continuing to pay the auto loan and student loans on a timely basis will only help improve your score, while this old debt will have no positive as long as its on your report and removing it could have some significant positive impact.
I agree, I would pay off those collections and charge off's. That debt is much more serious in terms of potential lawsuits etc and besides if you are going to be looking to buy a house most prime mortgage lender's will require you to pay them off and you don't want to look back and say to yourself " **bleep**, I could have paid them off when I had the chance". Get rid of that old nagging debt that's not just holding back your credit report but could wind up getting messy with collection attorney's and such.
If you're current on all your debt (e.g., auto and student loans), then it's almost certainly best to pay off outstanding balances on collections and charge off's. PFD is a good direction to go. If something is ready to fall off at 7.5 years then it is a judgement call on how to precede. You may well be forced to pay them off or have them fall off before you can get a mortgage loan. The simulator will give you some sense of score improvement on what debt you owe or past due amounts that are on your reports.