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Member
Posts: 10
Registered: ‎05-20-2009
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Paying Off vs. Settling Old Debt

My husband credit is full of old debt from 2-3  years ago.....my question is, what looks better for your FICO score and credit, paying the amount off in full as they stand, or calling to get a settlement amount.....or does it make a difference at all how you pay it???
Established Contributor
Posts: 618
Registered: ‎09-16-2008
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Re: Paying Off vs. Settling Old Debt

I think Settled is worse that Paid in Full.

 

But the best thing would be a PFD (Pay for Delete).  Instead of paying and they update to Paid in Full or Settled, you pay and they remove it completely.  Of course, they have to agree.  Search the forums for PFD for more details.

Wife's FICO Scores, 7/10/09: TU:??? EQ:634 EX: ???
Wife's FICO Scores, 2/13/09: TU:??? EQ:604 EX: 630
Wife's FICO Scores, 2/05/09: TU:??? EQ:592 EX: 630
My FICO Scores, 6/19/09: TU:757 EQ:744 EX:758 (all from MB; EQ Agrees)
My FICO Scores, 3/29/09: TU:755 EQ:746 EX: ???
My FICO Scores, 2/05/09: TU:??? EQ:730 EX: 720
Moderator Emeritus
Posts: 11,562
Registered: ‎08-29-2007
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Re: Paying Off vs. Settling Old Debt

Some lenders prefer to see "paid in full" versus "settled".

 

What is the current status of the accounts?

 

An account marked settled is scored the same as an account that has been charged off. So, settling could be worse than PIF in terms of score, depending on the current condition of the account.

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Established Contributor
Posts: 618
Registered: ‎09-16-2008
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Re: Paying Off vs. Settling Old Debt


sidewinder wrote:

An account marked settled is scored the same as an account that has been charged off.


 

So in terms of your finances vs credit score, you're better off not taking a settlement offer, keeping your cash, and having the creditor report a chargeoff for 7 years (unless it's a student loan).

Wife's FICO Scores, 7/10/09: TU:??? EQ:634 EX: ???
Wife's FICO Scores, 2/13/09: TU:??? EQ:604 EX: 630
Wife's FICO Scores, 2/05/09: TU:??? EQ:592 EX: 630
My FICO Scores, 6/19/09: TU:757 EQ:744 EX:758 (all from MB; EQ Agrees)
My FICO Scores, 3/29/09: TU:755 EQ:746 EX: ???
My FICO Scores, 2/05/09: TU:??? EQ:730 EX: 720
Moderator Emeritus
Posts: 11,562
Registered: ‎08-29-2007
0

Re: Paying Off vs. Settling Old Debt


Mike14 wrote:

sidewinder wrote:

An account marked settled is scored the same as an account that has been charged off.


 

So in terms of your finances vs credit score, you're better off not taking a settlement offer, keeping your cash, and having the creditor report a chargeoff for 7 years (unless it's a student loan).


 

If it is already a CO, settling shouldn't change things in terms of settled vs PIF.

 

Paying a CO that is reporting a balance(even settling if the balance will be marked at $0) could help if it the account is still factoring into your util%.

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Member
Posts: 10
Registered: ‎05-20-2009
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Re: Paying Off vs. Settling Old Debt

well all the accounts are "collection accounts" and as far as I can tell, nothing's "charged off"...which is good I guess?? how do I know what's being included in his util% ??  And thank ya'll so much, that answered alot actually.
Moderator Emeritus
Posts: 11,562
Registered: ‎08-29-2007
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Re: Paying Off vs. Settling Old Debt

If these are collections being reported by a CA, then there shouldn't be a difference to scoring between settling and PIF, as collections are score the same, whether paid or unpaid.

 

Your best option would be to try to negotiate a PFD.

 

Are these beyond SOL? What is DOFD? Have you DV'd?

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Member
Posts: 10
Registered: ‎05-20-2009
0

Re: Paying Off vs. Settling Old Debt

uumm..I'm new to this and dont' know what SOL would be?? They were mostly from when he lived in an apartment back around 2005, but weren't opened with the CA until 2007, and a few medical bills.  I'm unsure about the DV? either, but we know what the debts are if that's the DV involves. 
Moderator Emeritus
Posts: 11,562
Registered: ‎08-29-2007
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Re: Paying Off vs. Settling Old Debt

SOL = Statutes of Limitations-- time they have to sue you.

 

DV= Debt Validation

 

For the medical, visit the med debt board-- see link below.

 

Read the various links below, helpful information there.

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