The codes work like this...
When the debt is satisfied, the current status in your credit file reads one word. Paid. It is the same, regardless of the amount the creditor accepted as satisfaction of the debt.
There is no code that reads "Paid in full." And of course, current balance will read $0.
If the consumer settles for less than the full amount of the debt, a separate Special Comment can, and usually is, reported that reflects the debt was paid/satisfied for less than the full amount due. So paid in full is inferred by absence of the special comment "paid/settled for less."
If a debt is settled for less, it is always a good idea to try to obtain agreement that the special comment wont be reported. If not reported, the account will read to all reviewing your CR the same as if the debt was settled for the full amount.
Some feel that the special comment is actually scored by FICO. Regardless, it is definately not a special comment that is helpful upon a manual review of your CR.
FICO scores a settled comment on par as a CO. If the CO continually updated, then one day updated with a settled comment, then you wouldn't see any FICO change on the comment alone. However, there's always a chance to see a small bump as another account hits $0 as the number of TLs not reporting a balance increase and you stand to see a nice gain if the TL was a CC, assuming that CC negatively impacted util.
I am so confused and so upset that this person called me out of the blue and threatened legal action. I settled under duress and the threat of lawsuit and being told I had to agree to settle right then and there or get sued. It is a horrible and sad situation.
How is it a horrible and sad situation? They have a right to inform you of the consequences (lawsuit) of not paying and they have a right to attempt to collect a debt that you did in fact owe.
I think most people are under the impression that paying or setteling will give them a clean start.
Also, by law, if a collector says they are going to sue, then they have to sue. They aren't allowed to make empty threats. I didn't look at the balance paid (if posted) and money is always relative, but If I owed $15,000 as an example, and they offered to settle for $5000, then I'd rush and jump at the offer, duress or no duress.
I was informed that I was going to be sued if I did not give them an answer before I got off the phone by a COLLECTION AGENT WHO HAD NO RIGHT TO DO SO, I was not given anything in writing, I was lied to and told this was the best thing for me at the time and if I did not agree to the terms (NONE OF WHICH WERE PAYING THE FULL AMOUNT OWED - ONLY SETTLING - WHICH HAS TAX IMPLICATIONS as well as the ability to totally devastate your credit) I would suffer horrible consequences.
I had been working with their settlement people and had made a payment the DAY BEFORE I received this call and was basically THREATENED into settling a debt I was ACTIVELY paying on.. This was a 3rd department within this organization so obviously a case of the left hand not knowing what the right hand was doing.
I was also told that it would not longer report on my credit as a collection account and a charge off account, have recently been made aware that the debt will not be marked as PAID IN FULL but SETTLED IN FULL and will suffer for the next 7.5 years.
That is about all I can think of...