Good evening, My name is Ray and I have been repairing my credit history/debt for the past three years and narrowed it down to two accounts (1-current revolving account / 1-delinquent in collections). I have been paying off the current account every month on time and setup a payment plan twice a month to resolve my delinquent account w/the CA (on-time for the past five months). Now my question would be should I pay the account in full or accept the settlement? Original balance from the CA was $21k and I have reduced it to $17,200 as of this afternoon. The CA provided me a settlement of $5k to close the account, should I pay the account in full or accept the option given by the CA. I have paid all my balances in full to the other creditors months ago and no one has ever offered me a settlement so this caught me off guard. Now clearly if paying the account in full is better off for my score then by all means I will but if it does not help me in anyway by paying the $17k in full versus the $5k why would the CA rep provide me that option? Thank You for any assistance you could provide.
No, paying in full DOES NOT help your credit score, and WILL NOT help you in any way versus settling the debt for as little as possible. Why's that? Because the damage to your credit scores and creditworthiness was done when the debt became so far behind that the original lender charged-off and/or sold the account. Paying anything toward the debt will not help you in any meaningful way, other than the fact that if the debt is paid or settled, you don't have to worry about being sued in the future. That being said, you should attempt to settle the debt for as little money as possible, making sure to get the offer in writing BEFORE any such payment is made. The settlement letter should explicitly say that the debt is being "settled in full" for $x, and that the remaining balance will be forgiven and never sold or collected again. And of course, any settlement should be paid by cashier check; never by personal check or electronic debiting of your bank account.
Settle it. Paying in full will do nothing for your FICO scores unless you're able to negotiate complete removal of any negative marks from your credit reports too.
Ok thanks for the info...I ask the CA to provide me in writing a paid in Full document from them, the original lender and the line by line detailed bill. I will also setup the four payments in the form of a cashiers check. The bill will go off my report within the next two years.
