Hi, my first post in what I hope will be a helpful forum. I recently obtained my credit report from Equifax. On it, my mortgage is listed as an installment account and I have no mortgage account/balanced listed. I have a few questions: Do I dispute this? Should I check my other credit reports? (I had planned on getting one every 4 months, rotating agencies.) How does this error affect my credit score, standing, likelihood of approval, etc.? I've recently racked up a lot of debt, due to my stupidity and unwillingness to live within my means. Now, all of my cards are nearly maxed out, which is good and bad. I'm not using the cards, but I have nothing for emergencies. I pay everything on time, have no collections, late payments, missed payments, etc., my debt to available credit ratio is awful. But I digress. I'd like to get a 0% balance transfer to start tackling my highest balance card (which, of course, is also at the highest rate). Will fixing this mortgage thing help? Sorry for rambling. Thanks in advance for your advice.
Yes, you want this reported correctly. Your scores can be very different with an account reported as an installment account instead of a mortgage. First, for scoring purposes, there is a big difference between debtors with a mortgage, and those without. You are actually compared against a different subpopulation, even with the same amount of total debt. A mortgage indicates an underlying asset that is likely appreciating. Once you have made timely payments for a year or so, it also indicates a degree of financial stability and dependability. Your apparent financial strength increases with both paying down the debt, and with the increase in the appreciating asset. The asset value can even be estimated from the initial loan amount and the age of the mortgage. The payments also represent a substitute for the rent payments you don't have. This probably shows up in the debt repayment statistics, from where it would end up in the scoring model. Installment debt looks like credit card debt, except that as you pay it off, your available credit also decreases. In addition, it may be for purchases of depreciating assets. Your apparent financial strength increases less rapidly than when paying off a mortgage. Your debt is decreasing, but is there any asset with salable value there? You would definitely want to get this corrected, in order to get better terms on new accounts or transfers, to start making progress against your other debt. There may be other errors that may affect your attempts to get your debt under control. Staggering your free reports is fine for monitoring your reports once your situation is in order, but it's worth a few bucks to get an accurate snapshot now. The sooner you know your whole position accurately, and get any errors corrected, the better you will be able to make progress. If you are managing your account payments responsibly, and you make sure you have no erroneous negative information affecting your scores, as you improve your debt position, you will get increasingly better terms. You can turn having had large balances at one time into a credit asset, if you have the discipline to get it paid down.
Thanks. I thought there should be a difference between a mortgage debt and installment account debt, exactly as you explained. Without having a mortgage listed on my credit report, it appears I have no assets. I will contact the other reporting agencies and get this fixed. Ironic that I mentioned in my original post having no flexibility for emergencies -- I was in a car accident this morning! Thankfully I wasn't at fault (or hurt), so I'm hoping things are fixed in quick order without hassles from insurance companies! Thanks again.
