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I've been offered a $1,000 discount to settle a store credit card account that is 90 days past due. If I take the settlement the creditor will report "paid in full but for less than the full balance" or something to that effect. Which is better - getting rid of the account and saving the $1,000 or bringing the account current and paying regularly until it is paid off?
Either way I am still going to have a negative tick from the account for quite some time. (So I guess I am asking: how bad is it to settle the account?)
Here is a couple links that offer a slight contrast to your response.
http://www.ehow.com/about_5300212_debt-negatively-impact-fico-score.html#
http://www.creditcards.com/credit-card-news/debt-settlement-choose-credit-score-1265.php#
I am not sure what you are asking.
"Which is better, getting rid of the account and saving the $1,000 or bringing the account current and paying regularly until it is paid off?"
Whatever terms of payment you negotiate, it wont "get rid of the account." The OC account derogs will remain, and payed for less than the full debt does not look good on a manual review. It shows that you did not pay your full debt. Not exactly what a future creditor wants to see.
Paying in full always looks better on a subsequent manual review of your CR than a settlement for less than the full amount of the debt.
What payment terms give you is the chance that if you live up to them, it may forstall more serious further action, such as a collection agency referral, and thus a CA posting to your CR, or worse yet, legal action against you.
If you have the $$, a PIF for the full debt is always best. It is not always just about FICO scoring. It is about creditor evaluation of you as risk for full and timely payment of credit they may choose to extend to you.
@RobertEG wrote:
If you have the $$, a PIF for the full debt is always best. It is not always just about FICO scoring. It is about creditor evaluation of you as risk for full and timely payment of credit they may choose to extend to you.
+1
AndySoCal wrote:
Here is a couple links that offer a slight contrast to your response.
http://www.ehow.com/about_5300212_debt-negatively-impact-fico-score.html#
http://www.creditcards.com/credit-card-news/debt-settlement-choose-credit-score-1265.php#
@Anonymous wrote:
Each situation is different. If you can afford to pay the debt in full, that is always a good thing, but if you can't, it maybe in your best interest to settle to avoid the constant change to your account status if you are not able to pay the regular payment consistently. I have a friend who had over $50,000 in debt, plus a foreclosure. He got with one of those credit management companies. He had a lump sum of money, the company contacted his creditors. Some of his debt he PIF, some he settled and others he made payments on. That was 2 1/2 years ago. Since then he was able to get a car financed through Wells Fargo and the interest rate was fairly reasonable and his credit score is now at 620. I think the key is evaluating your individual situation and do what is going to work best for you.
Hi there.
I appreciate you commenting in this thread but it's almost 3 years old and the OP (Original Poster) has not been back online since their one and only post.
@Anonymous wrote:
Lol.. how did you even find this thread? Welcome aboard, anyway.