Watch the video above and answer the question when it's done. reveal question
What effect might this transaction have on Mary's credit score?
- Mary's credit score will go up.
- Mary's credit score will go down.
Correct!
Mary was trying to do the right thing. However, by paying off the old account, her credit report would reflect “recent activity” on an old delinquency. Underwriters may see it as a current problem rather than a three-year-old issue.
Mary should have first consulted with her lender before taking action. The money may have been more beneficial if used toward the down payment or kept in savings. - Mary's credit score will not be affected.