Does this help your credit score?
If you get something in the mail to "settle" the money you owe a place, does settling help your credit score? I got something that if I pay 60 per cent of what I owe, they will consider the matter over. But when it comes to my credit report, will this help? I swear, a very long time ago someone told me it doesn't help because something bad still goes on your credit report so you may as well just owe them the money. I know that sounds dishonest but that was what I had heard. That if you accept a settlement offer, your credit score does not improve and it is the same as if you still owe them the money as far as your credit report goes. Which is true? Please help!!!!!!!!!!!!!!!!!!!!!!!!!! Thank you.
Public Comments
- Ok. Here's how this works. Settling the bad debt may decrease your credit score in the immediate. This is because it shows activity on an old and bad account. However, in the long run, it is better and will improve your credit score. If you can settle for 60% of what you owe, unless you are going to apply for credit in the next 60-90 days, settle it. Take the short term hit to your credit for the long term gain!
- "Settled" is still a very negative notation on a credit report. If this is charged-off credit card debt...paying a settlement might give a slight increase in your score...but not much.....Make a counter offer to them: "Pay for Delete"...where they agree to delete the item from your credit report upon receipt of your settlement offer. Get all terms IN WRITING prior to giving them one penny. Only pay by money order. NEVER pay with electronic debits....
- It looks bad because you owed a debt, you agreed to pay that debt back, then when it came time to pay it back you couldn't afford all of it. It looks better than not paying at all, but it does look bad because you didn't pay what you were legally responsible for. However, depending on how much the debt and what it was for, it might be just a small mark on your credit. If it was something big like a huge hospital bill, its going to look very bad on your credit for seven years.
- It's better than paying nothing but, not as good as paying in full.
