Reply
Frequent Contributor
Posts: 252
Registered: ‎06-27-2007
0

Payoff Car Loan or Old Debt?

Guys,
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?
 
Thanks.
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
Valued Member
Posts: 30
Registered: ‎05-17-2007
0

Re: Payoff Car Loan or Old Debt?

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.
Valued Contributor
Posts: 1,065
Registered: ‎04-26-2007
0

Re: Payoff Car Loan or Old Debt?

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.
Regular Contributor
Posts: 226
Registered: ‎03-25-2007
0

Re: Payoff Car Loan or Old Debt?

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.
Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.