topic Re: credit question in Rebuilding Your Credit

credit question

Anonymous — Wed, 28 Mar 2018 13:24:47 GMT

Hello everyone!

I have a question: I have working on rebuilding my credit for a month or so now; one of the creditors I have been working with is Capital One Auto Finance as I had a car accident several years ago. My insurance paid the entire balance except for $2445. I received a letter from them yesterday saying that they are willing to settle for $490.00. Additionally, they gave me three payment options as follows: 1) I can pay the entire $490.00; 2) I can pay $81.67 for six months; 3) I can pay $40.84 for twelve months. After the balance is paid off they will consider my account as settled for less than the remaining amount. I'm not sure which option will help my score. Any help with this is much appreciated.

My Fico scores are as follows: Ex 629; TU 618; EQ 629. Vantage scores are: TU 705; EX 607; EQ 611.

Re: credit question

RobertEG — Wed, 28 Mar 2018 18:24:46 GMT

Each of the three scenarios represents acceptance of less than the full amount of the debt as discharge of the debt, so you arrive at the same ultimate place.

However, the creditor has the option, whenever they accept less than the full amount of the debt, of additionally reporting the special comment of paid/settled for less to the CRA, which informs others for the remaining life of the reporting that you have a history of not paying the full debt that you obligated. While the debt is discharged, it is never a favorable comment to inform potential lendors that you have a tendency not to pay your full debt, and thus lending to you may result in a loss.

You can add a condition to the settlement offer that they also agree not to report any reference to the debt having been settled for less than the full amount. That will result in your credit report appearing the same as if you had paid in full.

While not directly a scoring issue, it nonetheless may be a potential future issue in quest for new credit.

Re: credit question

RobertEG — Wed, 28 Mar 2018 18:24:48 GMT

Each of the three scenarios represents acceptance of less than the full amount of the debt as discharge of the debt, so you arrive at the same ultimate place.

While not directly a scoring issue, it nonetheless may be a potential future issue in quest for new credit.

Re: credit question

Anonymous — Wed, 28 Mar 2018 20:22:24 GMT

Okay, I was thinking if I agreed to make payments that it would help my credit...

Re: credit question

beutiful5678 — Wed, 28 Mar 2018 23:25:03 GMT

If Capital One is continuing to report every month that the account is charged-off then it is holding your scores down. If you pay it off, they will stop updating the account every month as charged-off and your scores will rise over time as you put distance between the last time they reported. Additionally, a paid account looks better than an unpaid account upon manual review (e.g. when you get an installment loan, when a credit card application has to be reviewed, or you recon a credit card application after denial).

Re: credit question

Anonymous — Fri, 30 Mar 2018 14:02:28 GMT

So, I think I'm going to take your suggestion and ask them to not reference my account as "settle-for-less." However, if they agree to that, can I have them email me the agreement so that I can get this taken care of immediately, or do I need it in writing?

Thanks

Re: credit question

Anonymous — Fri, 30 Mar 2018 15:09:41 GMT

Update: I called Capital One Auto Finance and asked if they would agree to report to CRAs as paid in full, but no bueno. They will only report it as settle for less than full amount. I went ahead and paid what they offered. I'm hoping it doesn't hurt my scores too much.

Re: credit question

Anonymous — Fri, 30 Mar 2018 15:51:34 GMT

Good luck on your journey. You should see a score boost from paying even if it's not in full.
I would let it sit a few months then write them a good will letter. Tell them how much you appreciated them working with you on resolving the matter and politely ask if they would consider removing it from your report.

I'm getting ready to send out a GW letter myself. Worse they can do is say no or not respond. Some folks on here have had good luck with similar letters. But I would wait a bit before trying. ☺

Re: credit question

Anonymous — Fri, 30 Mar 2018 16:02:59 GMT

Good luck! I REALLY hope you're right and it boost's me score - even if it's just by a few points. 🙂