I have this being report on my credit report for a credit card: 180 days as of 7-2001, 2-2000, 1-2000 150 days as of 6-2001, 5-2001, 12-1999 120 days as of 8-2001, 4-2001, 9-2000, 8-2000, 11-1999 90 days as of 3-2001, 7-2000, 10-1999, 6-1999, 5-1999 60 days as of 2-2001, 6-2000, 9-1999, 4-1999 30 days as of 1-2002, 1-2001, 5-2000, 8-1999, 3-1999, 12-1998 There are additional more current lates on this, but I do not have the copy in front of me. Regardless--it is bad. I have been offered the opportunity to settle the debt for about half of the amount, with the following terms: We'll stop all efforts to collect. We'll report your account to the national credit bureaus as "settled", with no balance due. On the flip side, I now have the money to pay this debt in full. Would I be better off paying it off or settling? I hope to get a VA loan this fall. I will have all old bills paid, many derogs removed, etc. Very good debt to income ratio--about 15% after I take care of this and one other debt. What should I do?
If you're already passed the validation point (not quite sure of what your situation is with this account, etc., however from what you posted, this is what I assume), and you're simply looking to settle this issue, I would suggest this: The terms you described above are terrible. They would HAVE to report the account as no balance due if they accept your settlement offer, so don't let them bully you into thinking they're doing you a favor. You say you have the funds to pay this off in full. Now, as far as simply paying the account in full goes, it really won't look any better than having a settlement notation on your account (vs. a paid remark) simply because it's already a derog account, and either outcome will still keep it as a serious derog. If they're offering 50%, settled, no deletion, I suggest you counter the offer with 60% total deletion of account, OR deletion of all lates (thus turning a derog account to a positive account). If you have to go higher, say 65% or 70% go ahead, bottom line is you want this account either gone, or lates deleted, any other way still looks bad, pulls down your score, and could cause you to pay higher interest on your mortgage loan.
Actually, VA and FHA loans are not score driven. They do require that collections and judgements be satisfied. Try and cut the best deal you can but at the end of the day, you'll have to pay 'em before you can close.
