01-05-2010 06:34 AM
01-07-2010 09:48 AM
I defaulted on my student loans a few years ago. Citigroup took it to court and won a judgment of $47,000. I contacted the law office in December and they are allowing me to do a settlement of $28,000 instead of the judgment amount. I paid a $10,000 lump sum payment and have monthly payments for the next 11 months and at the end of the year will have the $28,000 paid off. I probably should have posted this question before accepting the settlement however I just wanted to get rid of this debt. How will a settlement of a judgment be viewed on my credit report? After it is paid off is it likely that I can purchase a home in 2-3 years?
Unfortunately, this is likely to have a major negative impact on your credit for some time to come, because the judgment will be a Public Record. Settling a judgment is much better than not settling it, but settling now (or even paying in full now) does not make the severe negative of the judgment itself go away. Also there may be other dings such as late payments during the time period leading up to that judgment. If you do absolutely everything perfectly from this day forward then you might be able to get a mortgage in a 2-4 years but it is very difficult to predict how long it will take before that becomes possible for you. Also when you do buy the lender may require a larger down payment, so you should start saving as much as possible.
myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.>> About myFICO