Negotiating to pay off lower balance

[Anonymous]

I recently came into a large sum of money that I am using to pay off ALL of my credit cards, however would like to make the most of the money so I can use it for other important things. My biggest credit problem is just too many cards (almost 10) and that shows as being detrimental on my credit report. I would like to take 2-3 of my cards with generally lower credit limits and see if I can negotiate to pay a lower balance and just let the creditor close my accounts. This would still leave me with a substantial amount of available credit through my other cards to help my credit-to-debt ratio. My main concern is whether or not having the creditor close my account will be more or less detrimental compared to just paying those 2-3 cards down to $0 balance and leaving the accounts open, but still just having a LOT of different cards.

So, is it worth it to negotiate or do I just pay the whole amount? We probably won't be buying a car or house for at least a few more years. Some people say "everyone is having trouble right now" and that it won't effect our ability to get a loan in the future. Thoughts??

[guiness56]

You never want to close a CC with a balance.  If you settle for less than owed, there will be a balance.  Yes, it would be detrimental to your score.

I would pay off all of the balances and just not use them.   Cut them up if you want to but leave them on your CR without a balance.

[AndySoCal]

I agree with the previous post. If you settle an account  for less than full balance and the account is not nor has been late you could lower your score around 100 points or so. Search the internet for Debt settlement and FICO score there are some interesting articles on this subject.

[Anonymous]

Thank you both for your suggestions and after reviewing a few more articles I am leaning toward just sucking it up and paying them in full. So you don't think there will be any leniency on people because of the horrible economy? Frankly, my family has made it through OK (though we are now actually budgeting and tracking our finances more closely), but my husband had to take a pay cut and furlough days from his company and my hours have been cut in the medical profession, plus I am a part-time stay-at-home Mom. We have definitely been the victims of ridiculous interest hikes by the CC companies and I think we should be getting some benefit as we try to put ourselves in a better financial position.