Understanding FICO® Scoring

[Drew]

Settling and PIF as it relates to the account status on your CR?

I have an OC reporting the account as (paid/closed), after settling the account weeks before.

[TheNewWorldMan]

There are distinct listings for settled for less than the full amount versus paid in full.

I've seen some posts around here that say mortgage and other lenders (i.e., those who have a human being review your CR) look upon paid charge-offs more favorably than settled ones, which in turn are viewed as better than unpaid and still in collections. I've never applied for a mortgage so I can't confirm or deny that. What they say would seem to make sense, but so many things about the credit system defy common sense that making sense alone isn't enough to make me believe something is true.

[Drew]

So for whatever reason, the OC reported the account as "paid" instead of "settled"?

[Tuscani]

I wonder if there are any differences between "paid" and "settled" in terms of scoring?

[Drew]

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Tuscani wrote:

I wonder if there are any differences between "paid" and "settled" in terms of scoring?

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That's what I'm trying to understand.  And aside from that, my Truecredit reports are showing an account I settled as (paid/closed) and I was wondering if that's going to happen with all my charge-offs, if I settle them.

Message Edited by Drew on 04-29-2007 10:37 AM

[Tuscani]

Maybe Barry will chime in.

[Brammy]

Of the two the Paid/closed in full will be the best notation for the situation.  Even when you settle for less than the amount owed, it is still a discharged colection so it won't effect your score.  However anyone eyeballing yoour report such as a mortgage lender may actually require you pay the remaining balance or have hte status updated to paid/closed before they will touch you. Can also give you heck for those credit cards that 'need further review'.

Be glad for the paid closed notation.

[Drew]

Finally a straight answer.

So, the (paid/closed) annotation was actually a good thing and out of the normal.  I'll be crossing my fingers for the other accounts to show up that way.