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To Pay Or Not To Pay

July 30th, 2015 by tisner

As a follow-up to a recent blog post,Your Credit and Your Home Purchase, I want to share a tip from a credit restoration company I know…

“As Shakespeare almost put it, To Pay Or Not To Pay, that is the question:

debtWhen it comes to your credit scores, paying the right account or the wrong account can make a massive difference in your credit scores. Let’s focus on what not to pay. One would assume when paying off bad debts on your credit report, the credit scores would always increase. However “one” is not always correct. Paying off items like your utility collection, or your cell phone collection will most likely decrease your scores. This is despite the popular belief that having a $0 balance on your collection accounts must be better than owing money. Balances on collections are irrelevant, for example you could have a one million dollar medical collection or a one dollar medical collection and if everything else is the same the scores would also be the same. The reason why your scores generally decrease when a payment is made is because by making a payment you reactivate the account causing it to report as new again. This is shown as the ‘DLA’ on a credit report. This ‘DLA’ or ‘Date of Last Activity’ represents the weight of the account AND the seven year statute until the item will fall off naturally (which is a whole other problem, but we will save that for another day).

The reasoning behind this madness is that the algorithms that calculate scores cannot discriminate against wealthier/poorer individuals. So the fact that a wealthier person has the ability to pay off a certain dollar amount more easily than a poorer person would be discriminatory on algorithm calculation.”

Confused? Contact us and we’ll put you in touch with a reliable lender who can answer your questions.

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Teri Isner is the team leader of Orlando Avenue Top Team and has been a Realtor for over 24 years. Teri has distinguished herself as a leader in the Orlando FL real estate market. Teri assists buyers looking for Orlando FL real estate for sale and aggressively markets Orlando FL homes for sale.

You deserve professional real estate service! You obtain the best results with Teri Isner plus you benefit from her marketing skills, experience and ability to network with other REALTORS®. Your job gets done pleasantly and efficiently. You are able to make important decisions easily with fast, accurate information from Teri. The Orlando Avenue Top Team handles the details and follow-up that are important to the success of your transaction.

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