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Will settling these debts lower my score?

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Anonymous
Not applicable

Will settling these debts lower my score?

This is more of a two part question.

My 3 FICO 8 scores are 640, 615, 554

I’m cleaning up my credit to get approved for a financial assistance home mortgage. I need a 640 median score. I have an auto charge-off from 2015, a dismissed bankruptcy from Dec 2014 (was 19 and lied to about student loans being included in a bankruptcy by the lawyer. Never followed through with it once I got chewed out by family, but it’s reporting as dismissed) and then a collection account with a third party collection company with Sprint. I have 2 more collections I’ve just paid to have removed. Utilization is at 7%, all other trade lines positive no late payments. Sprint has sent me a debt verification letter not just a statement and I’ve disputed the account already. I called and asked for a “settle for deletion” and even a “paid in full” for deletion. I was informed either way I go about it, the account will remain on the credit and just report as either or.

Should I pay/settle this Sprint debt? Will it lower my score? The collection started reporting in 2017, I’m unaware of the date of first delinquency.

Next question is in regards to the charge off auto debt. The company Regional Acceptance is reporting the balance as $0 and my account has a $8,000 balance in their charge off department. Experian is reporting the account “failed to pay” each month. Regional acceptance claims they’re only reporting the $0 balance charge off. Told me to dispute with Experian so they can send them the information they have. Asked the same question to settle/pay the debt but they responded with the same thing the account will just reflect the status. The account is 4-years old. Should I again settle the debt or will it hurt my score?

I just need a few points to get my FICO to a 640 as well.
Message 1 of 8
7 REPLIES 7
Remedios
Credit Mentor

Re: Will settling these debts lower my score?


@Anonymous wrote:
This is more of a two part question.

My 3 FICO 8 scores are 640, 615, 554

I’m cleaning up my credit to get approved for a financial assistance home mortgage. I need a 640 median score. I have an auto charge-off from 2015, a dismissed bankruptcy from Dec 2014 (was 19 and lied to about student loans being included in a bankruptcy by the lawyer. Never followed through with it once I got chewed out by family, but it’s reporting as dismissed) and then a collection account with a third party collection company with Sprint. I have 2 more collections I’ve just paid to have removed. Utilization is at 7%, all other trade lines positive no late payments. Sprint has sent me a debt verification letter not just a statement and I’ve disputed the account already. I called and asked for a “settle for deletion” and even a “paid in full” for deletion. I was informed either way I go about it, the account will remain on the credit and just report as either or.

Should I pay/settle this Sprint debt? Will it lower my score? The collection started reporting in 2017, I’m unaware of the date of first delinquency.

Next question is in regards to the charge off auto debt. The company Regional Acceptance is reporting the balance as $0 and my account has a $8,000 balance in their charge off department. Experian is reporting the account “failed to pay” each month. Regional acceptance claims they’re only reporting the $0 balance charge off. Told me to dispute with Experian so they can send them the information they have. Asked the same question to settle/pay the debt but they responded with the same thing the account will just reflect the status. The account is 4-years old. Should I again settle the debt or will it hurt my score?

I just need a few points to get my FICO to a 640 as well.

 

Hi and welcome to the forums @Anonymous 

 

Okay, lets start with " Stop disputing accounts that are reporting properly" . It wont lead to deletion, it will lead to correction if there is one to be made. Even if one collection agency removes their reporting , it will get resold and reported by another one later. It's dropping your score every time 

If you read some stupid stuff on the internet, it's all " Dispute! Dispute! Dispute!" 

If it was that easy, everyone would have perfect credit. So, do yourself a favor and dont 

 

Sprint will not PFD. Best you can do is either pay in full or settle. Scoring wise, no difference, however payment in full looks better on manual review. If you are going for mortgage, payment in full may be preferred, but I'd ran that by perspective lender. Some dont care if it's PIF or settled, as long as it's taken care of. 

If Sprint still owes the debt but is using CA to collect on their behalf, you can ask them to recall collection then pay them directly. 

 

Unfortunately, your car charge off is also reporting correctly. CO status is for accounting purposes, and failure to pay is just their monthly update. It basically means you still havent paid that $8000.00.

So, I'm really not sure what you would be disputing. 

It's a large amount, so I'd be concerned about possibility of litigation unless you're out of SOL in your state. 

As far as paying in full or settling, same as above. It would really depend on future lender and their expectations.

 

Seeing how both of those accounts are currently updating, your original question "Will settling these debts lower my score?"  can be answered with " Your negative accounts are hurting your scores and will continue to do so as long as they remain unpaid or drop off your CR after 7 years from DOFD. 

 

Good luck 

Message 2 of 8
Anonymous
Not applicable

Re: Will settling these debts lower my score?

You’re correct I’ve been watching YouTube videos and forums saying to use the 602 letters and “dispute dispute dispute” like you said. Wish I say ficoforums sooner. I’ve gone through 2 lenders and neither say anything about the debts or charge offs. They mentioned just paying down my credit cards and leaving a small balance which I have. My middle score still isn’t where it needs to be. My closed auto account with Santander from refinancing is reporting a 30 day late payment but I sent documents to trans and equi to correct the late payment. I don’t want to do too much but I want to pay the lenders back and settle the debts. I just don’t want to lower my score trying to fix my wrongs.
Message 3 of 8
Anonymous
Not applicable

Re: Will settling these debts lower my score?

The SOL is 6 years in the state of Georgia. How would that affect me as the joint owner if they do try to sue for the balance?
Message 4 of 8
Brian_Earl_Spilner
Credit Mentor

Re: Will settling these debts lower my score?

You have to be careful with disputes. If they update, but don't delete, you're going to take a scoring hit. And if the update is incorrect, you'll have a hard time getting that disputed because it's already been "resolved". 

    
Message 5 of 8
Brian_Earl_Spilner
Credit Mentor

Re: Will settling these debts lower my score?


@Anonymous wrote:
The SOL is 6 years in the state of Georgia. How would that affect me as the joint owner if they do try to sue for the balance?

A bank can sue anyone on the loan. A judgement can't be reported on a credit report anymore, but it can be looked up. If you fail to pay the judgement, they can garnish up to 25% of your pay. So, it's a huge deal if you're sued and lose.

    
Message 6 of 8
Anonymous
Not applicable

Re: Will settling these debts lower my score?

Right now every debt on my report is accurate so the only things I’ve dispute is what I have proof for and have sent in. Right now I’m I’m trying to figure out if I should go ahead and settle the 4 year auto charge off and settle with Sprint. I don’t want to shoot myself in-the foot settling a debt. Experians website states it can effect the score negatively. I need to know blunt and honest if I should settle them or leave them alone. I can’t afford to pay the full balance as a college student.
Message 7 of 8
Remedios
Credit Mentor

Re: Will settling these debts lower my score?

Scoring wise, settling vs payment in full makes no difference. It's still negative, but updates stop.
That's what you want if PFD is not accepted, and Sprint wont.
Message 8 of 8
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