NOT paying off mortgage to improve credit score

An tAlbanach

Hi,

I have found myself in the enviable position of being able to pay my mortgage off when it isn't due to mature until 2049.

I have poured large amounts of money into the mortgage and could now bring it to under 5000k. Each time I put in large deposits my repayment per month's substantially reduces and will be fairly minimal soon.

My query (I'll get professional advice at some point too) is, should I bring it down to a token monthly payment with the hope it builds a good credit score over the years since I'll not have any other debts OR should I pay it off and find an alternative option?

Jim2007

There is no credit score system, just a record of any outstanding debt that you have failed to pay off…. And your previous payment history is one of about 6 - 8 factors taken into account when considering granting you further credit. So not it would not be one of my decision points in your situation.

Buddy Bubs

Thats an American thing you're thinking of isn't it? Building up a credit rating

Rackstar

https://www.boards.ie/discussion/2058346667/not-paying-off-mortgage-to-improve-credit-score

€5,000,000 is a pretty big mortgage. With that sort of money involved, I’d be paying for professional advice, I wouldn’t ask the internet.

JVince

Pay off your mortgage if you can. You are then debt free with a substantial asset and therefore a very attractive person for a financial institution to lend money to should you wish to take a loan.

Forget American or UK style "scoring" - in reality that's for people who borrow regularly and do not have an asset like a house and probably renting - hence easily can move on and therefore a "scoring" system is used.

bartkingcole

if you can afford to pay off your mortgage then do, unless you have an investment which will provide a greater return than the mortgage payment taking into account tax liability on earnings from the investment.

amdublin

Am I missing something? There is no such thing as credit scoring in Ireland. What you have described i.e. having debt (i.e. you got credit) being seen as a good thing for your credit score is an American thing. In Ireland it is seen better as having no debts imo.

I would think definitely better to just pay off your mortgage

An tAlbanach

Calm down lads. Credit score was a thing where I grew up in UK and there are plenty of Irish websites suggest it's a thing here. Simple misunderstanding. Not everyone is a financial expert.

Thank you for the solid advice on paying off.

Q&A

https://www.boards.ie/discussion/comment/122055699#Comment_122055699

No/low mortgage would give you greater capacity to borrow more so that might be a consideration. You'll obviously save on interest expense by paying (some of) your mortgage off sooner.

Given credit scores are less of a concern the other thing to consider is your pension and if you'd be better off putting some/all of the money into that for old age.

laketreeroger

https://www.boards.ie/discussion/comment/122055699#Comment_122055699

lol you don’t need to be a financial expert to cop that.

laketreeroger

https://www.boards.ie/discussion/comment/122055732#Comment_122055732

what you mean less of a concern? They don’t exist in Ireland.

Q&A

https://www.boards.ie/discussion/comment/122055754#Comment_122055754

Ah semantics

Is there a one size fits all estimate of your credit worthiness that all lenders use in Ireland.... No.

Will each lender do their own assesment of your credit worthiness by looking at, amongst other things, your debts past and present and how you serviced them... yes

Maybe they'll attach a letter like a Fitch/Moodys ratings, maybe they'll use a traffic light approach or maybe they'll use numbers but you will get assigned a 'score' for the purposes of deciding if and how much 'credit' they'll advance.