Dear Liz: Our mortgage is paid off and is no longer shown on our credit history since it’s been 10 years. Is there a way to have that information included on our credit report? Seems that our creditworthiness might be enhanced by the fact we own our home outright.
Answer: Credit scoring formulas can be counterintuitive at times. These formulas measure only how you handle the credit accounts your lenders report to the bureaus. So information about your income or assets, including a paid-off home, aren’t included in the formulas.
Lenders, however, often seek additional data to assess applicants. For example, mortgage lenders these days are quite interested in potential borrowers’ income, assets, job stability and debt-to-income ratios. So the fact that you own your home may impress a future lender, even if it doesn’t matter to your scores.
You can’t force a lender to report any credit account to the bureaus, and paid-off or closed accounts don’t have to be reported for any specific period. But you can keep good credit scores even without a mortgage or other installment loan on your reports. The key is to have and lightly use a few credit cards, always paying your balance in full each month. That should keep your numbers high without requiring you to pay a dime in interest.
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