Having lived abroad for 15 years, I've returned to the US almost 1 year ago and am preparing to buy a house via a mortgage. Naturally, I'd like to get favorable rates. I face a couple of challenges though:
- I have a size-able debt with the IRS and have made repayment arrangements with them via their Form 9465.
- Having been out of the country for so long, I had almost nothing on my credit history, despite having multiple mortgages, auto loans and credit cards before moving abroad.
First thing I did upon repatriation was to buy a new car. This was in part to re-establish a credit history. It was a 6-year note, I paid it off today, in only 11 months. I also got a couple of credit cards. So far, so good, my credit score as of today is 700.
I worry that paying off my auto loan will actually hurt my score because now, I have no installment accounts that are active. I do use 2 credit cards though.
So, I wonder if it would serve me better to ask a bank for a loan for the IRS debt, and make payments to a bank instead of the IRS.
One more important factor here is that due to point no. 2 above, I had to shop around a little for the auto loan and due to this, I have now 9 credit inquiries already against my credit reports. So, I worry that moving the debt to another institution will lower my score by virtue of adding another credit inquiry.
To summarize, I'd like to continue building a good credit score to give me the best mortgage options in a 9-12 month timeframe. Given the scenario above, does it make sense for me to keep paying the IRS, or get a loan from a bank, possibly adding a harmful credit inquiry or two to my credit records?