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My school loan was defaulted and the IRS seized my tax return to pay it in full. Will my credit score go up?
Side note: I know that the loan being defaulted lowered my credit score. It was defaulted for 2 years. What I'm asking is now that it's paid off, will the score go up even though it was paid by garnishing my return.
5 Answers
- Dixie Darlin'Lv 71 decade agoFavorite Answer
No, in fact your credit score might go lower temporarily if the account was an old account. When payment is received on an old account, then the status of the account updates, making new activity on an old debt.
In order to improve your credit score, you need new lines of credit, since the default and you need to make consistent on-time payments to those accounts. Prompt payments is what will increase your credit score over time.
- 1 decade ago
Uh, no. Your score will most likely remain low for at least 12 months since you were in default with your loan. Student loans are no joking matter.
- ReenaLv 71 decade ago
No... because the history remains.
You didn't make the payments and the IRS had to step in and take your tax return because why?
Because you would never have used that money to pay off your bills.
Why would a lender think you worthy of a loan?
- Anonymous1 decade ago
Judy is wrong. It will go up, paying a late debt in full will increase your score. Nobody knows the IRS paid it off.
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- Go with the flowLv 71 decade ago
No, at least not immediately.
The fico system does not improve just because a bill has been paid.
The fico system is based on past history.
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