I have been unemployed for 18 months, with clean credit until these problems, and will need graduate study loans next year. - A Bank of America Account can charge-off by end of September. They are willing to settle for 30% (ie 3K of 10K) by Thursday 9/30. - A discover account charged off at the end of August. They are offering a 60% (ie. 6K of 10K) settlement spread over 18 months. (Monthly $377) I can borrow about $5k. However, money is real tight right now and I would rather not waste it. How do I get the best possible outcome? Any suggestions/ideas are welcome. Please help. I am somewhat new and have not read all the FCRA and other material.
I wouldn't recommend borrowing more money to pay off existing debt. That just continues the downward spiral. If you want to settle, don't forget to negotiate your credit scores as part of the process. A paid charge-off is essentially just as damaging to your credit scores as an unpaid charge-off. If you can negotiate complete removal of the negative marks in return for payment, that's the ideal situation. A 30% offer doesn't sound unreasonable from BofA, but 60% sounds high. Remember, this is a business transaction now, so treat it as such. Keep your correspondence in writing and make sure you get any payment arrangements in writing as well.
thank you!! If I am able to settle both accounts with the OC and pay over a few months, how will this improve my score? Or will it simply prevent it from getting worse? It would be great to have a way to improve that 562 score.
It won't improve your credit scores. In fact, they might get worse once all the charge offs and settlement post to your credit reports. That's the irony of credit scoring models. Of course, the older these negative marks get on your credit reports the less of an impact they'll have on your overall credit scores.
I dont think it will have an immediate impact on your score but in the long run it will be better. Also if you apply for student loans or reestablish credit with secured loans/card, they do look to see if you have any unpaid charge offs.
