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Settled Versus Full Payment

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cl5776
New Contributor

Settled Versus Full Payment

I am clearing up all of my debt issues detailed with all three credit bureaus. Over the last several months, I have received Settlement Offers from AFNI, Inc. for outstanding debt with Verizon. The Settlement Offer states that, "once paid, our records will reflect the status of your account with AFNI, Inc. as settled in full."

 

I have been browsing through this forum and I see that "settled in full" may be more harmful to my credit than "paid in full. I have one more Settlement Offer from another AFNI account and I do not want to make another "mistake" if I have made one mistake already.

 

Is accepting and paying a Settlement Offer from a creditor the same as payment in full? If not, have I damaged my changes of improving my credit score? If I have, what should I do about the other Settlement Offer letter that I plan on paying next week?

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llecs
Moderator Emeritus

Re: Settled Versus Full Payment


cl5776 wrote:

@llecs wrote:

Moreover, paying a CA via a settlement or otherwise can actually drop your score. DV them and if verified, then offer a PFD for a settlement amount.



Thank yo, llecs. I know the debt is legitimate and verified. I remember the phone number associated to the bill and I remember the past due balance.

 

When I made the one settlement payment, I made verbal arrangements to pay the second settlement payment (a different account number) next week. Is it too late to send a Pay for Delete letter based on the settlement amount they offered?


 

Reason you always want to verify is that some CAs tend to forget how much is actually owed. I've seen countless stories on here people paying a CA without a DV first only to get hit with new charges or fees, or the CA would apply payment to a different debt. A DV, even if you know the debt is yours, gets a specific amount in writing from the CA's own documents.

 

If you made an arrangement for next week, then IMO, send a PFD ASAP (or via e-mail or fax). I'd include into the PFD a mention to e-mail or fax back a response.

Message 6 of 6
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itsjustmeibe
Regular Contributor

Re: Settled Versus Full Payment

Hi - Welcome to the forums. I recently became aware of the settled vs PIF difference when my BF applied for a credit card through the credit union. They didn't like that notation (and denied the card) because it looks like he doesn't pay his debt obligations. It was also for Afni & Palisades. Never mind that when you call these companies and ask how much is required to stop harassment, they offer a settlement amount. Who knew it would bite him down the road. He paid $1071 on a $1400 bill.

 

I suppose it doesn't much matter when your scores are high enough to get approvals from automated system, but on a manual review, which is what the credit union did, it HURT.

Message 2 of 6
cl5776
New Contributor

Re: Settled Versus Full Payment

Thanks for the welcome. I know it is a "hit or miss" type situation. I am more concerned with the actual terminology then anything else. I contacted Equifax and asked one of the representatives. I read to her exactly what I quoted in this thread and, per her knowledge, they are "settled in full" and "paid in full" are one in the same.

 

She confirmed what you mentioned that some creditors may look at "settled" unfavorably. I am just looking for a more concrete answer than just hit or miss. Right now, my scores are sub 600 and if "settled in full" would hurt me, I probably should just pay it in full.

 

If I may ask, has he run into any other situations where that settlement payment has adversely affected a credit decision?

Message 3 of 6
llecs
Moderator Emeritus

Re: Settled Versus Full Payment


cl5776 wrote:

Thanks for the welcome. I know it is a "hit or miss" type situation. I am more concerned with the actual terminology then anything else. I contacted Equifax and asked one of the representatives. I read to her exactly what I quoted in this thread and, per her knowledge, they are "settled in full" and "paid in full" are one in the same.

 

She confirmed what you mentioned that some creditors may look at "settled" unfavorably. I am just looking for a more concrete answer than just hit or miss. Right now, my scores are sub 600 and if "settled in full" would hurt me, I probably should just pay it in full.

 

If I may ask, has he run into any other situations where that settlement payment has adversely affected a credit decision?


 

Per FICO scoring, "Settled" is not the same as "Paid in full". In fact, FICO reads all "settled" accounts as charge-offs. However she is right in that some creditors don't like to see that.

 

However it is a moot issue as this is a CA. The collection is worse than a CO, thus "settled" doesn't matter here.

 

Also note that a $0 balance CA is just as damaging to your score as a $10,000 balance CA. Moreover, paying a CA via a settlement or otherwise can actually drop your score. DV them and if verified, then offer a PFD for a settlement amount.

Message Edited by llecs on 02-09-2009 11:16 PM
Message 4 of 6
cl5776
New Contributor

Re: Settled Versus Full Payment


@llecs wrote:

Moreover, paying a CA via a settlement or otherwise can actually drop your score. DV them and if verified, then offer a PFD for a settlement amount.



Thank yo, llecs. I know the debt is legitimate and verified. I remember the phone number associated to the bill and I remember the past due balance.

 

When I made the one settlement payment, I made verbal arrangements to pay the second settlement payment (a different account number) next week. Is it too late to send a Pay for Delete letter based on the settlement amount they offered?

Message 5 of 6
llecs
Moderator Emeritus

Re: Settled Versus Full Payment


cl5776 wrote:

@llecs wrote:

Moreover, paying a CA via a settlement or otherwise can actually drop your score. DV them and if verified, then offer a PFD for a settlement amount.



Thank yo, llecs. I know the debt is legitimate and verified. I remember the phone number associated to the bill and I remember the past due balance.

 

When I made the one settlement payment, I made verbal arrangements to pay the second settlement payment (a different account number) next week. Is it too late to send a Pay for Delete letter based on the settlement amount they offered?


 

Reason you always want to verify is that some CAs tend to forget how much is actually owed. I've seen countless stories on here people paying a CA without a DV first only to get hit with new charges or fees, or the CA would apply payment to a different debt. A DV, even if you know the debt is yours, gets a specific amount in writing from the CA's own documents.

 

If you made an arrangement for next week, then IMO, send a PFD ASAP (or via e-mail or fax). I'd include into the PFD a mention to e-mail or fax back a response.

Message 6 of 6
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