How much does it affect your FICO score when you settle one or two CC's instead of all of them?

[Anonymous]

I'm trying to determine whether it makes sense to offer a settlement on a credit card or not.  I have several, all current, no deliquencies scores are mid 600's.  If I could settle the biggest three at 50%, I'd "save" around 30k, but how badly would it thrash my score?  I realize I'll get 1099's for these and the tax implications of settling.  I'm wondering how bad it would be to settle one, two or three vs all 7 CC's from a score perspective.

Thanks

[Anonymous]

If the CCC would accept a settlement, It would sit on your CR *settled for less* closed  for 10 years.

Other creditors, down the road, might not like this.  Also the CCC must accept it first.

Speaking for myself I would never do this!   Bust your butt paying down on the CC even if just one at a time. You will see an increase as you pay them down and they age.

[Anonymous]

Do you have any other negatives? Charge offs?

An account marked settled is scored the same as an account that was charged off.

I would say the impact would depend on what other negative you currently have and how much "good" credit you have to dilute the bad.

[Anonymous]

Regarding your 1,2,or 3 vs 7 question, when repairing my credit I used the analogy 'A chain is only as strong as its weakest link'. Meaning that if there is 1 settled for less account, it wouldn't make much more difference if there was 7. With problem histories like ours, your score is MOSTLY determined by your most deragotory account no matter how many. After that is utility usage. I don't know the percentage breakdowns, but I have seen others post them on these boards.

I paid all my COs in full. I believe it helped me. All but 1 of the TLs fell off before the 7 year mark. My guess on this is since they were paid, the OC didn't really want to spend any effort maintaining correct records. It was easier (cheaper) for them to delete.

edit to add: All my COs were still with the OC, none made it to CAs. I think that made a big difference to me also. 1 might have been assigned to a CA (not sold), but I paid the OC in full.

Message Edited by scorerise on 06-02-2009 05:16 AM

[BungalowMo]

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@Anonymous wrote:

Regarding your 1,2,or 3 vs 7 question, when repairing my credit I used the analogy 'A chain is only as strong as its weakest link'. Meaning that if there is 1 settled for less account, it wouldn't make much more difference if there was 7. With problem histories like ours, your score is MOSTLY determined by your most deragotory account no matter how many. After that is utility usage. I don't know the percentage breakdowns, but I have seen others post them on these boards.

I paid all my COs in full. I believe it helped me. All but 1 of the TLs fell off before the 7 year mark. My guess on this is since they were paid, the OC didn't really want to spend any effort maintaining correct records. It was easier (cheaper) for them to delete.

edit to add: All my COs were still with the OC, none made it to CAs. I think that made a big difference to me also. 1 might have been assigned to a CA (not sold), but I paid the OC in full.

Message Edited by scorerise on 06-02-2009 05:16 AM

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OK...fess up!  Who dropped off early??  Who didn't?? 

[Anonymous]

BOA was reporting 1 single CO for a random month after I paid in full. It previously showed OK for every month after PIF. I disputed it and they just deleted the TL.

Wachovia Bank overdraft protection CO is still on my reports.

One other dropped off early 1-2 years ago. I'll have to look it up. Same situation, error on the report. I disputed, they deleted the TL.

[Anonymous]

ok i'm kind in the same boat but i dont have anything good reporting on my credit except one loan that i am paying off this month. other than that i just have charged off accounts. i am wanting to settle these all for much cheaper amounts. since i dont have anything good reporting anyway is it really going to hurt me to settle rather than PIF? i know it will show *settled for less* on my credit but isnt that better than charged off on my credit? i dont have the money to pay them all in full so i just assume settled is better then charge off for 10 years? thanks for any advice on this.

[Anonymous]

I can't answer that. But if you have no open revolving credit, get some if your current credit scores are good enough. It will increase your scores. Even if it is a small secured cc that they overcharge you to set it up. Establish at least 1 positive TL as soon as your scores allow.

Message Edited by scorerise on 06-02-2009 01:09 PM

[Anonymous]

I actually have no derogatories of any kind.  I just have a bunch of maxed out cc's and tired of treading water.  I will be coming into some cash that I could settle maybe a two or three of the biggest ones, so I'm trying to ascertain whether it's worth it to save 20-30k vs. how much damage to the FICO score.  I didn't realize settled accounts are scored the same as charge offs.  If settling a couple of accounts dropped my score 20-30pts vs. 50-100pts, I might consider it.  I appreciate everyone's comments so far!

[Anonymous]

If you have no lates showing in the last 2 years, my GUESS is that you would lose close to 100 points by settling an open account with no derogs currently.