how much will settling a card affect my score

[Anonymous]

i just got a letter from chase that they are willing to accept my settlement offer. my fico score right now is 688. how much will it affect my credit score if they report "settled with 0 balance" your help is appreciated.

Message Edited by tamir on 09-28-2007 01:33 PM

[SmartCookie]

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tamir wrote:
i just got a letter from chase that they are willing to accept my settlement offer. my fico score right now is 688. how much will it affect my credit score if they report "settled with 0 balance" your help is appreciated.

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Depends on if it was already a charge off or collection, varies by how much the full debt was affecting your Utilization, lots of variables.   Paid is better than not paid of course but a collection and the lates on it will not just not matter because it is now paid. 

Since you have not paid, I would use that settlement $ number to now offer them a PFD so that the whole thing is completely wiped from your CRs. 

[Anonymous]

the credit card account is current. never late on any payments etc. i took the initiative and contacted them (Chase) for a settlement because of my financial situation and they accepted to settle the account for 40% of the balance. so the question would be.... if i never had any late payments or any other negative remarks on the credit report. how would settled with zero balance affact the score? i asked them for PFD but they (Chase) said they can't do that. any thoughts?

Message Edited by tamir on 09-28-2007 09:21 AM

[SmartCookie]

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tamir wrote:
the credit card account is current. never late on any payments etc. i took the initiative and contacted them (Chase) for a settlement because of my financial situation and they accepted to settle the account for 40% of the balance. so the question would be.... if i never had any late payments or any other negative remarks on the credit report. how would settled with zero balance affact the score? i asked them for PFD but they (Chase) said they can't do that. any thoughts?

Message Edited by tamir on 09-28-2007 09:21 AM

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I'd like to see exactly what is reporting currently. 

If there are still no lates showing and they are saying they will show the balance as 0 and show the status as paid, it will look fine but one thing I would also request is if they would mark it closed by consumer, not by them. 

[CreditDrama85]

if i had to guess...i would say your score would drop about 5-10 points if you did this. while it may be better for your financail situation, it will appear negative when manual reviews of your CR are conducted.

even if closed at your request, your credit report will say "acct legally settled for less than full balance"

[Anonymous]

Not that it matters much with such a low outstanding balance,but did you know that with a "settled" account, the difference is taxable income?

[sl]

If the settled amount is is greater than $1600 you will get a 1098 and have to report it on your taxes. Also, many times during a foreclousre you have to report part of income, depends on if the house was sold for less than you owe.