Length Of Time Information Remains On Credit Reports. I regularly try to posts and update blogs with information related to a Borrower ability to obtain financing, and credit information is among the most important I try to keep Borrowers informed with. I feel strongly about providing credit information, because it is the one thing Borrowers have a significant level of control over in obtaining financing.
As a Loan Originator I work with many Borrowers who need to improve their Credit in order to qualify for a mortgage. There are several factors I need to consider to help a Borrower improve their Credit Scores, and also important for Borrowers to know as they monitor their own credit report. Particularly important is the Length Of Time Information Remains On Credit Reports. For example:
- Judgments always need to be paid in order to qualify for a mortgage, but if a Judgment is close to reporting for 7 years on a Credit Report it may be wise to not pay it and let it come off the credit report on its own.
- Tax Liens do not have a time limitation for how long they will report on a Credit Report, however, if the Tax Lien is an IRS Tax Lien it does not have to be paid in full if the IRS has granted a payment schedule.
- Credit Cards will report on a Credit Report for as long as the Credit Card has a balance, and will not come off the Credit Report until the Credit Card has been inactivity for 7 year.
- Collections work differently than Judgments, Tax Liens, and Credit Cards. Collections (listed as charged to profit & loss in the chart below) will remain on a Credit report for 7 years, and will have a different impact on a Borrower's Credit Score depending on the length of time the Collection Company has been reporting it. If the Collection has been reported within the last two years, it needs to be paid for the Credit Score to improve. If the Collection has not reported for two years or more, it will have a negative impact on the Credit Score if paid and brought current again.
Given the differences in how debts report on a Credit Report and length of time they report, it is important to know what needs to be paid, how much to pay, and how much longer the debt will report for, especially if the Borrower has limited funds. Depending on what the Judgment or Collection is, and length of time it has been reporting on the Borrower's credit report, will determine what I will recommend. So in talking with the Borrower I will discus the time periods in the chart below, and what order the Judgments, Tax Liens, Credit Cards, or Collections should be paid or not paid.
The best thing is to ALWAYS pay everything off, but when a Borrower can’t pay everything, I have found the chart below to be very helpful in making decisions. I hope this chart proves to be useful for those reading this blog as it has been useful for me.
Info about the author:
George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or firstname.lastname@example.org