Which is better for my credit – settlement or paying in full?
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I’m behind on my credit card payments more than 90 days. I’m trying my best to solve this issue, and was wondering what the best solution for my credit is – settling or paying in full?
At this point in time settlement is not an option
The credit card company will ever agree for a settlement while the account is still open. They will never settles for less than a full payment on active accounts.
You can try to negotiate a settlement only on accounts that has been charged-off and are closed. This is, needless to say not a desirable situation because a charged off account is one of the worst things for your credit report. Not to mention that you won’t be able to get a new credit card with a fresh charge off on your report.
You need to act fast, because credit card companies typically charge off accounts after 120 days of delinquency.
What I would do is talk to the credit card company and ask how much you need to pay to go current. Expect to pay more than the original balance because of late fees and interest.
As for charged off accounts – the damage is already done, and your Fico score will not increase whether you settle or pay in full.
However, as potential creditors examine your report in the future – “Paid in full” looks better than “Settled” when it come to making a lending decision.
When negotiating a settlement, be sure to get all terms in writing before you pay. Any promise over the phone about any settlement deal is worthless. Never deal in “good faith” with debt collectors.
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