3 Thoughts on How adverse does a settlement for credit card debt effect your credit ?
  1. Reply
    October 18, 2011 at 6:27 am

    Settled means to a potential creditor that you still did not pay part of your debt even though your creditor for that account allowed you to pay a lessor amount. This fades and means less as time passes.

  2. Reply
    October 18, 2011 at 6:46 am

    Pojo is correct, but if you can get to agree on the settlement, as paid as agree, or show payments paid with no negatives, then this will be favorable. If you have already given them payment, then it’s to late. But if not, contact them with this arrangement.

  3. Reply
    October 18, 2011 at 7:28 am

    If this is a current, active credit card account, settling for less than the full balance (if you can get such an agreement from the credit card company), would result in the account being noted as chargeoff/settled — a negative.

    If this is defaulted credit card debt already in collections, it’s already a negative and paying it off won’t improve your score. The damage is already done and the item will remain on your credit report for the balance of the 7 year reporting period, whether paid or not.

    However, creditors do look at your whole report, not just your score. Paid old debt looks better than unpaid. The difference between “paid” and “settled” is only very slight. You may as well negotiate settlement for as little as you can.

    Be sure to get any settlement agreement in writing and keep it along with your payment proof, forever. Do not give collectors direct access to your bank account.

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