Hello everyone. This is my maiden post! I'm in a bit of a pickle and could use some experienced advice. Any help would be appreciated. A bit long but its interesting!
A bit of background. Got my first credit card in 2007 fresh out of high school. It was a Capital One Platinum something with a $2500 limit. I had no credit file so this card is what built my credit report. I got a Blue from Amex In 2011 with a 720 credit score. It had a 10k limit. This is where my all my troubles began! I was young and lost but thought Amex was the way to freedom. I started charging while completely intent on paying my monthly minimum at least, but usually more. I even charged my full college tuition on the card one semester. Amex kinda figured and reduced my limit to $6000 after a while.
well im still young but not so lost anymore. Along the way ive had some hardships. Fall of 2012 i got sick with some medical issues. They eventually led to me having to stop working. Ive gone through bouts of depression during this time and Its taken a year and a half for me to finally start getting better. While initially i had quite a bit of savings to pay my cards monthly, eventually my savings have dwindled.
Currently, i am around 150 days delinquent on my Capital One with a $2600 balance. Capital One offerred a interest reduction to .9% for 12 months which i accepted. They revoked charging previlges but the credit line is open. Capital One stated card will remain open unless i close it but charging prevliges will never be reinstated on that card. (That makes no sense to me).
And i'm around 150 days delinquent on my Amex with a $6400 balance. Amex offered up to 9.99% interest reduction for 12 months or I negotiated a $3500 settlement with $115 upfront through Amex collecting agency GC Services. The card has been 'closed by credit guarantor' but NOT charged off. I received a regain card membership letter in the mail for an Optima Card with variable APR and $49 annual fee. Only other loans on my CR are defferred student loans.
So, my parents have been nice enough to lend me $6000 to pay these down. I could settle the Amex for $3500 and pay off the Capital One around $2600. That'll be the end of this chapter in my life. Problem is, digging around on some forums, it seems doing a delinquency settlement is more detrimental to credit scores than delinquency itself. Apparently, if its been Charged Off, a settlement wont do any further damage but if its just delinquent, a settlement will do as much damage as a CO? So im just not sure which route to take…
Should i take an Amex settlement on the delinquency or should i pay it down in full and get the Optima?
If the delinquency wont have a lasting affect on my credit score, id rather just pay in full. But if a settlement wont add to the damage, then id rather settle. However id like to have an Amex again in the future. So what are the chances Amex will overlook this? The amount itself isnt too much, only $3000 written off for them.
My credit score is Transunion 501, Equifax 438, and Experian 465. 2 delinquent CCs, and a few current student loans. Thats it.
My main concern is rebounding my credit scores sooner than 7 years but if a settlement can save me $3000 with little further damage than delinquency, I could sure use that money to get back on my feet sooner. Thanks a bunch for your help!! Much appreciated.
TL;DR: Please read it. I put lots of thought into it. Thanks.
