Advice on a Chargeoff Account (KeyBank)

[quicksilver185]

Here is the account and the situation. I have been working day and night to improve my credit in order to apply for a mortgage and thanks to this myFico and its memebers I have been able to raise my score 120 point! over the past year. My score is at an acceptable to to apply for an FHA mortgage, however I still have this thorne better known as key bank in my side. I have spoken with key and they are prepared to settle the accout for $7200 which I am prepared to pay because I have been told even with a high enough credit score I will not be approved by underwriting with an unpaid charge off. My dilemma is if I take the settlement it will report as "settled paid for less then full", any opinions would this new reporting decrease my score any further then the charge off bad debt status? FYI there is no pay for delete with this company the are the biggest pain I have dealt with yet.

Student Loan AccountKey Bank

Status as of Oct, 2012

Date openedSep, 2006

Date of last activioty Jun, 2009

$12,237

Installment

Individual

$128

All Banks

Descriptions [?]

• Charged off account
• Student loan

No contact information provided by Equifax

Balance [?] Current Status [?] Past Due Amount [?]

$15,444

Bad debt/collection

$15,444

Seven year payment history [?]30 days late60 days late90+ days late

0 times

0 times

1 time (Aug 2012)

Recent payment history [?]10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 92010 2011 2012

Legend:	Currently paid as agreed
	Collection

Worst Delinquency [?]

Bad debt/collection

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[RobertEG]

Regardless of what they accept as satisfaction of the debt, it will have a status of paid.  It tells others that the debt is satisfied.

By paying less than the full amount of the debt, the creditor has the option of additionaly reporting a special comment of paid for less.

While many creditors will not delete the reporting of a CO based on payment, it is not uncommon for them to agree not to report that additional special comment.

Have you made that "pay for not reporting paid for less" offer?

That comment is never postive, as it informs others that, in the past, you failed to fully satisfy entire debt incurred. 

As for the scoring impact of that special comment, you will get opinions all over the spectrum on its effect.  Some will assert that the affect of the CO trumps, and thus the special comment will not additonally lower your score, while others will assert that the additional special comment will hurt your score.  Personally, the later makes no sense, as it is a positive act by the consumer, but it seems to be an unresolved issue.

If you are able to get agreement not to report that comment, then review of your CR will appear the same as if paid in full, and is thus worth pursuing as an offer.

Making it show as if paid in full is, itself, helpful.

[quicksilver185]

Thanks I appriciate your reply to my post. They insist that they are required to report it as settled for less then full, I think I may just take my chance and settle, seeing that it would take me awhile to come up with the full amount and they wont removethe CO statue even if I pay in full.

[Shogun]

+1  As long as it's paid I think you're good.  The damage is done.   Save $5000.  Then after it's paid, GW the heck out of them.  It's not going to hurt, it's paid.  Good luck!