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Settled for less than full balance

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Settled for less than full balance

Settled for less than original amount
Hi,


I am working with a mortgage lender and currently waiting on my Rapid Rescore results.

I'm hopeful that I will be approved.



A few months ago my car was totaled (not at fault). When I purchased the car I didn't think to get GAP insurance(at fault Smiley Indifferent) so I was left with a balance of about 6500 dollars.

The auto loan company offered a settlement that I could pay in 2 months time and the loan would show a $0 balance but a comment would be added indicating that I settled for less than the full balance.

This means my car loan would go from Paid as Agreed to Settled for Less than Original Amount. I asked the mortgage lender and they think that the impact to my credit score wouldn't kill my chances.
It's in good standing and never had any derogatory comments. I wish they would just let me pay monthly but since it's totaled they want the full balance in about a month.

How bad do you think this will hurt my score and my mortgage chances?


Thanks,
Message 1 of 4
3 REPLIES 3
Super Contributor

Re: Settled for less than full balance


@Well_Able wrote:
Settled for less than original amount
Hi,


I am working with a mortgage lender and currently waiting on my Rapid Rescore results.

I'm hopeful that I will be approved.



A few months ago my car was totaled (not at fault). When I purchased the car I didn't think to get GAP insurance(at fault Smiley Indifferent) so I was left with a balance of about 6500 dollars.

The auto loan company offered a settlement that I could pay in 2 months time and the loan would show a $0 balance but a comment would be added indicating that I settled for less than the full balance.

This means my car loan would go from Paid as Agreed to Settled for Less than Original Amount. I asked the mortgage lender and they think that the impact to my credit score wouldn't kill my chances.
It's in good standing and never had any derogatory comments. I wish they would just let me pay monthly but since it's totaled they want the full balance in about a month.

How bad do you think this will hurt my score and my mortgage chances?


Thanks,

Very badly. And for a long time.

 

Don't do it.


Total revolving limits 730000 (603500 reporting) FICO 8 scores: EQ 722 TU 764 EX 734
Message 2 of 4
Member

Re: Settled for less than full balance

Whew! That's hard to stomach. 

I accepted the settled but the balance isn't due until Aug 30th. 

 

My personal injury attorney referred me to a consumer protection lawyer and I'm going to explore my options. 

 

I'll be fine in the long run no matter what. 

 

Thank you for your response.

Message 3 of 4
Super Contributor

Re: Settled for less than full balance


@Well_Able wrote:

Whew! That's hard to stomach. 

I accepted the settled but the balance isn't due until Aug 30th. 

 

My personal injury attorney referred me to a consumer protection lawyer and I'm going to explore my options. 

 

I'll be fine in the long run no matter what. 

 

Thank you for your response.


Good luck.

It seems so wrong to me that they should accelerate the loan, even though you have been paying on time.

But that's banks for you.

They will crush you as soon as look at you.


Total revolving limits 730000 (603500 reporting) FICO 8 scores: EQ 722 TU 764 EX 734
Message 4 of 4
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