descison on where to put money

[Anonymous]

this is a repost to the corrrect thread of forum

I have approx 5k of found money ( OT and escrow refund)

I have a very low credit score 540

Ihave approx 8k in CC debt at 18-22 %

I have back taxes on my house of 5k at 18%

what is the best to do to raise my score I am one of those who needs to refi.

( Ihave worked at the same job 18 yrs. own 3 houses one of which is private and needs to be refinanced. ) medical issues caused the drop in scores. now creeping up slowly from the gutter. was 650-690.

thoughts?

[Anonymous]

Back taxes - the last thing you need is a tax lien or the house being sold for taxes....

[Anonymous]

1234........take that $$ and pay your RE taxes...........pronto....now..... like today........do NOT hesitate.

[PayYouNever]

tac1234,
If you want to raise your FICO score then paying your taxes isn't going to do anything, unless you have a lien already filed, to which you're already screwed.

What I would do is workout a payment arrangement with your local tax authority to pay down the back taxes and make sure you don't miss any payments. Tax authorities are a little easier to bargain with -- and it's not effecting your score.

I would take maybe 40% of your money and pay down the taxes, and use the remainder to attack the CCs.

Sure a lot of people will disagree, but if your goal is to raise your score, then by reducing your CC Utl, you'll raise the score over the next few months (which means don't use the cards anymore either).

With a higher FICO you could reasonable borrow the money at a cheaper interest rate to pay down your taxes (18% is steep), and you'll be able to refi with a better rate. Also, you score can benefit by having another piece of revolving credit, as FICO likes various types of debt, so use the amount of money you owe in back taxes to help you raise your score.

[Anonymous]

I would take care of the tax issue first. How do think your scores will look when (or if) you lose your house? If you can come up with some type of payment arragement with them THEN try to PFD some of those med collections. Your cards are all under 20% util, so that should be the least of your worries. 

[Anonymous]

I agree with the others,  right now don't worry about credit score,  take care of the back taxes,   they have no problems putting liens on property,  plus that insane interest rate,  you have  I'd pay it.

[Ausfarm]

My opinion...address your taxes first.  If the tax authority gets a judgment against you, you're screwed.  You can negotiate PFD w/ other creditors.  A judgment is a judgment that you can't negotiate off of your credit report. 

[Anonymous]

hi tac, welcome to the forum.

Without question, back taxes!

Your home is more important than merely improving your credit scores.

[Anonymous]

OK I will pay the taxes , JUst have to do some more OT to have $ to pay down my cc debt. Everytime I pay one off I color it in pink majic marker and do a happy dance. 3 of 8 are paid off and even though I know the taxes are more important I wanted to drop the amount owed on cc in one fell swoop. this would allow me to refi and  get out from under so much  pressure.   thank you I will do the long term responsible thing. I can't wait to see my scores higher.

[Anonymous]

You will have a hard, if not almost impossible time, re-fing owing back taxes on your house!  This is a major no-no for any lender because taxes trump their loan position every day of the week.

If you can find a lender who will do the re-fi with cash-out to pay-off the back taxes (and who will commit to this in writing prioer to paying the cards) then you could pay the cards, raise your score and then tdo the re-fi -- BUT they would then have to do a second inq in your credit to use the new score - and their regs may have gotten tighter by then (it takes a couple months for everyhting to report) - and you won't be able to refi cashing out to cover the taxes (and do you have the $ in the property to cash out?) - home values may drop (lower LTV), etc -  TAXES first!

Message Edited by Lady_Scarlet on 12-08-2007 10:10 AM