Charge-off pay in full or settle?

[CreditOCDinCali]

I just settled for "less than amount owed" to prevent the company from taking me to collections. They've already reported my account as Charged-off yesterday and were going to send it to collections, which would've created another ding for me. I instead settled for "less than amount owed". Did I do the right thing?

[Anonymous]

Sounds like you did the right thing for you. It’s all about what makes sense financially. I settled a couple and paid off a couple in the last year or so. Paid in full will look better on your reports but settling got you out from under the debt and moving forward so I’d call it a win.

[Anonymous]

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@Anonymous wrote:
Sounds like you did the right thing for you. It’s all about what makes sense financially. I settled a couple and paid off a couple in the last year or so. Paid in full will look better on your reports but settling got you out from under the debt and moving forward so I’d call it a win.

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I agree here.

However, to add, it still goes on your report and will ding your score. Remember there are a lot of factors in your score - this could be a big ding or a small ding. If your score goes up, that probably means you've been bucketed into another score bracket with other similar profiles. You'll eventually want to get out of that bucket as it's probably a worse bucket that you were in prior to this. If the account is paid, wait a few months, 6 months or more to request that the tradeline be deleted as a GW.