settle for less than full balance vs. paid in full???

[jdxprs1]

is there a score difference when settling a 5 year old capital one charge off, if you settle for less than full balance rather than paying in full.

[Anonymous]

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@jdxprs1 wrote:

is there a score difference when settling a 5 year old capital one charge off, if you settle for less than full balance rather than paying in full.

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I don't believe that the issue is so much a scoring difference as FICO views the accounts as either opened or closed, but more so how future creditors view the settled account vs an account paid in full.  I have done both and I can say that I haven't seen from personal experience that it has affected my ability to obtain credit.  I know that when I still had the collections unpaid on my CRs that this factored in my inability to obtain credit, but as I took care of the obligations, I started getting more approvals.

[RobertEG]

I agree with kaykay.

If you are seeking a settlement for less, then I would suggest including a separate term that they agree not to report that the debt was settled/paid for less than the full amount.

That additional special comment is totally optional on the part of the creditor/debt collector.

In a manual review, that comment informs others of a history of not paying the entire debt that you have obligated.

That means the creditor took a loss.  Creditors dont like to lose money in extending credit.

Absent that special comment, even though settled for less, it will appear in your credit report the same as if it had been paid in full.