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Would this help or hurt?

Regular Contributor

Would this help or hurt?

Hi everyone!


DH got a letter in the mail from NCO financial that reads "you can settle this account for 75% of the above balance in up to 12 monthly payments". First question, does this mean that I would need to PAY 75% to settle, or that I would need to PAY 25% to settle?  Not sure if i'm reading it backwards or not.


It is from a closed Cap 1 cc balance $2096.97; $1370 written off, DOFD 9/2006. The original limit was only $300 (there was an extreme circumstance that caused this to be overlooked and not handled sooner).


Second question: since the balance is still reflecting in his EQ FICO (its showing that his util is at 114% - due to this credit card), would it be beneficial to "settle" (pay the balance down) to get the lower util or try for a PFD? The balance is showing as past due.


Also, he only has a 6 yr credit history and this card is the oldest source of credit, and only 1 of 2 delinquent acct;. AAoA 3.5 yrs, last missed payment 3 yrs 11 months ago.



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Goal Score: 650

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Message 1 of 4
Established Contributor

Re: Would this help or hurt?

If you accepted the offer, you would pay 75% of the original debt, that's what I take from that sentence.


If it were me, I'd try to ask for PFD. A charge off, paid or not, still hurts. In addition, accepting the settlement might mean that the account will have a comment like "settled for less than full"; that comment doesn't affect the scoring, but will hurt you when a live person reviews your report. 



Starting Score (08/11/11): TU08: 643
Current Score: TU08: 741
Goal Score: Stay in the 700s; keep reports clean

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Message 2 of 4
Legendary Contributor

Re: Would this help or hurt?

"Settled" means they will consider the debt to be legally satisfied.  In other words, no more debt.


The amount you pay is between you and them.  The end result, whatever the agreed amount to "settle" the debt, results in the same credit reporting status.


The significance difference in how you reach settlement is that if you settle for less than the full amount of the debt, they can additionally report a special comment to your credit file, stating "paid for less than the full amount."  Your credit file does not record the amount of your settlement, just the fact that you did not satisfy the full amount of debt incurred.

That comment is, in and of itself, a negative mark in your credit file, as it informs others that, in the past, you did not pay all of your obligated debt.

But settled for less results in the same debt status......  paid.

Message 3 of 4
Super Contributor

Re: Would this help or hurt?

Also make sure they don't report is as settled for less then is owed.

1/25/2021: FICO 850 EQ 848 TU 847 EX
Message 4 of 4
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