@Anonymous wrote:
Thank you very much. That makes a lot of sense. My utilization is currently at 7% not factoring that one account. I’m nervous if I settle it and while my utilization will benefit a great amount, I don’t like the sound of it looking “new like you said.
Whether to pay in full or settle is a decision only you can make. I mean, saving money is always a big plus -- but we wanted you to be aware of what the downfalls to settling could be. Either way, paying it is your best bet for both securing your mortgage and the improving your credit -- so think about it a bit, consider your finances, and move forward.
Good luck!!
@Anonymous wrote:
What makes you think it’s better to pay it off in full opposed to settling for less?
Because when you settle for less than the full amount owed, it usually results in a long term negative on your credit reports. There are various terms for it, such as 'chargeoff', 'settlement' etc. But whatever it is, it is a negative which drops your scores for 7 years.
Either one results in showing a no balance as they both resolve the account. I understand CK scores are worthless but mention them because vantage scoring does not use charge off balances towards your utilization, and if everything else is the same as far as what’s on both reports than I’m assuming what’s causing the damage is the high utilization.
Negatives in your report, such as late payments, are huge in impact, so don't make assumptions about something else causing the damage.
Also in regards to the “dumb advice” I was told this from three different places. The banks loan officer who uses a simulator that he says is very accurate and both Lexington law and sky blue credit repair.
Nevertheless, advising you to 'settle' a debt to improve your credit scores is dumb advice. Sorry if I've offended.
Paying it off in full or settling for less, do not remove it from my reports
Paying it off in full gives you better chances of removing it from your reports down the road
so I don’t see any added value of paying all that extra money. Only benefit would not getting a 1099c. I was just trying to see if anyone had a similar experience and their results.
+1 @SouthJamaica Also add. PIF looks better than settled for less to future creditors that you took responsibilty and paid your debts in full. Good luck either way and Happy Holidays.
