Settled account vs. paid in full account

[Anonymous]

Hello 

I have a home equity lines of credit that is listed as charged off on my credit report. .  I am trying to get the CO record off my credit and the bank has offered to settle the account for 70% of what is owed.  The representative at the bank advised me that they will release the lien and settle the account in full if I pay 70%.  I received a letter stating the settlement amount, however it does not mention anything about changing my credit report to reflect Settled/paid in full.  I tried to request this in writing but the bank says they use standard forms that they cannot change but assured me this will happen when I receive the paperwork to close out the account. If I settle and send the bank the funds.... what can I expect to see on my credit report and is it significantly better than Charged Off. ?  Does anyone know the actual affect (number of points) difference that this makes to your score?  Does anyone know the difference it will make if the bank actually receives 100% of the funds in full after the account is already charged off? I will still have the lates which are over 180 past due either way.  Thanks for the advice 

[llecs]

Welcome to the forums! I split your post to form a new thread here.

If you settle you likely won't see any score gains. A new comment would appear of "settled" or "paid for less than full" and those are scored negatively and on par as a charge off or paid charge off. Even if you paid 100%, there still wouldn't be any positive change in FICO score because a paid baddie is just as bad as an unpaid one, per scoring. However, while the status won't help you any, if this HELOC is currently factored into your utilization and if it is hurting your utilization, you might see a FICO score improvement once the balance reaches $0 by means or settling or PIF. You'd have to pull your two FICO reports to see if that's the case or not. YMMV based on the CL and the status of the HELOC.

If you want it off, try offering a PFD letter. If they agree to it, then pay it, and they'll delete.

[ronniejr]

I had a $9,100 - 4 year old charge off  with Providian I settled with in October 10'.  Originally the collection agency asked for payment in full, then offered to drop the interest and offered just to pay the principle ($6,800).  I offered $5,000 on the condition my CR's say "Paid in full".  They said yes so I wired the money that day.  Unfortunatly I did not get my offer in writing and the "paid settlement" not "Paid in full" that I wanted on my CR's was used.   They lied to me over the phone.  I was pissed but I learned a valuable lesson.

 NOTE:  back in Nov..  06'  I also  settled on a Chase Visa card from $8000 to "paid settlement" $4000.   Also paid a Citi bank card off $530.00 in full the same day.   I got both settlements in writing first that time.   So this wasn't my first time doing this yet I still made a rookie mistake. 

As of 10/2/1011 my scores at time were EX fako: 610, EQ fico: 620, TU fico: 610.  Once my Providian settlement kicked in and  my Providian balance  was  at $0    My EX fako increased by 57 points, EQ fico increased by 60 points and TU fico increased 58 points.  That happened by the end of Nov.  10'.

   A weeks later (November 10') I got on a roll and paid off my 3 year charged off  AMEX gold (I had since 2000)  in full for $1,283.  I made a  deal I would get another AMEX (Optima) card with a 500 limit.  Well they sent me a new Optima card with a $1000 limit!!!  Now my credit reports  as of 3/18/2011 are:   EX fako:  680, EQ fico 695, TU fico 678.  I keep my AMEX balance at $0 to keep my credit used/available credit % low.

 (FYI  I use Free credit.com as my CMS for my fako EX score.  I pull it every day - I am already paying the $14/month might as well use it.  Usually when there is an increase in my fako there is a good chance my ficos also increased.  I then  fork over the $40 bucks to get my real TU/EQ  FICO scores on MyFico.com.  This system works for me so far.)

Make a long story short.  I made deals that worked for me and my financial situation.  I was in collection for years and it bothered me both mentally and emotionally.  .  So on all 4 accounts charged off accounts I have 2 paid settlements and 2 paid in full.  The key is the $0 balance and no late payments for 4.5 years.  I also feel good because... lets face it ...I owed money and I should pay my debt.  Its only right.

For anybody out there my advice is  if its a fairly new credit card  charge-off  (within a year) pay it off ASAP in full or work out a installment deal.   If its been 4 years or longer and getting near the 7 year mark when it gets dropped off your CR's  THEN a settlement  deal can work for you because the collection agency will do anything to get money now.  They know they will lose the "affecting you credit" leverage on you.    

I hope bdb this helps.  I know a home equity line is a whole different monster and it HAS TO BE PAID as some point.  Good luck and keep me up to date on what happends.

Ps.  if anybody out there has a better way of doing what I did please advise.  I am new to this

[LIGHTNIN]

Welcome to the family here at myFICO,

Hi ronniejr,  

 Sorry to hear about your hard lesson you learned, I think most of us here has done a rookie mistake sometime or another.

But Congrats to YOU!!   Your credit repair seems like it going pretty well.

And just in case you didnt know, you can Google "myfico discount code" to save a little money, to get your CS's, CR's and other things here.

[ronniejr]

thanks!   I got to tell you I have learned more on the MyFico forums on - not just Credit - but   business,  Securities, Medical debt issues, Car loans, Mortgages etc etc.  These forums have been worth their weight in gold.  The information I received  on CMS's, Fako vs. FICO, Fico Auto enhance Industry Loans were awesome. 

Thanks again for the tip! 

ronnie