How does a settlement affect your credit vs. paying in full?

Question

I have been offered a settlement on a small debt that although in my name is not mine. I am going to pay it so that it will not be a negative on my credit report (the debt is already past due). I am trying to find out what the difference in effect will be in paying the settlement over the whole amount (the difference is around $100, but I just hate to pay more than I have to when it really isnt even mine!) thank you :)

Answer 1

Unless you have in writing that they will report your account as "Paid in full" and not "Settled for less than full balance", pay the additional $100.00. Believe me it's worth it.

Answer 2

It makes absolutely no difference, as long as they report it as "Paid". They will put a comment on your credit report that states that the account was settled for less than the full balance, but that comment will not affect the score. Be sure to get the settlement agreement in writing, though!

If the account is an older account with no recent activity, your credit scores may dip initially, because it shows recent activity on a collection account. They will eventually go back up, though, and should be higher than before.

AMANDA H: If there is already a collection on his credit, it makes NO DIFFERENCE whatsoever whether he pays the account in full or they settle for a lesser amount. I have been in the mortgage business for over 10 years. This is what I do for a living - I'm VERY experienced in helping people repair their credit so they can qualify for mortgage loans.

Answer 3

This Site Might Help You.

RE:
How does a settlement affect your credit vs. paying in full?
I have been offered a settlement on a small debt that although in my name is not mine. I am going to pay it so that it will not be a negative on my credit report (the debt is already past due). I am trying to find out what the difference in effect will be in paying the settlement over the whole...

Answer 4

first i would suggest that you dispute whatever this bill maybe on your name because the company has to proof to the credit beauru that you were actually the person that created the debit because the same thing happened to me and i had to dispute and eventually after the investigation it had to be removed because they couldn't prove that i had actually created the debit. Secondly if you dont want to go thru that process you should take the settlement and request that it be removed off your credit upon the company receiving your payment. GET THE LETTER STATING THAT THEY AGREE TO REMOVE THE NEGATIVE MARK BEFORE ACCEPTING THE SETTLEMENT. and if they agree take the settlement if not pay the account in full and place a fraud alert on your credit report with transunion,experian, and equifax so this doesn't happen again. Also if you have any credit cards you may want to ask them about their credit monitoring services to avoid future happenings. good luck!

Answer 5

If it's in your name it's gonna stay that way unless you try really hard to get that changed. That settlement will stay on your credit report for up to 7 years. It's best just to bite the bullet and pay them now.

Then wait a year or so and get your credit report. If the late is on there then dispute it and say it isn't yours.

Much less hassle then a ding on your score for 7 years

Answer 6

Heads up... one things to always go by if it sounds to good to be true it is... I was the office manager at a debt settlement company in miami, fl i know all the rules regulations laws cheats everythign you could think of ask and i will know.. This question is simple.. pay the extra hundred dollars what happens is the following 1- if the debt forgiven is over 600 than come taxes you will have to pay tax on it ..ex you owe 1000 and they seettle at 300 you must pay tax on the rest....the second thing... when you "settle a debt" it stays on your crerdit report as settled in full or paid as agreed for min. 7-10 years... that looks bad as if you are not responsible to pay your debt. it will NOT show up as paid in full so not only are you late you settled... trust me pay your entire debt... one thing though... u said its not urs??? if you are an authorized user and not a signer the debt can not appear on your report you can write to transunion , experian, and equifax and dipute it... if you are a signer than just pay the entire debt.... also,just a head up there is no such thing as credit repair...companies say they repair your credit when all they do is illegally send letters as if you were writing them to the three agencies disputing items that are really things you did,,, ex... inquires you had companies do they write letters saying you never aloud them to access your credit... that is like a poker game if some one at the credit centers gets your letter and doesnt do their job than it will get removed...chances are slim though... so be careful... just pay your bills

Answer 7

a settlement means you had a hard time paying your bill, the only way to get any money at all out of you was to make a settlement with you. paying in full, well that speaks for itself.

Answer 8

Relax. You will not upset your credit score using MOST of your line of credit as long as you pay off a decent chunk, to all of it AFTER the bill comes. FICO knows some months you will make major purchases. It is only when you stretch out too much debt that you raise red flags for FICO. Going OVER your credit limit can also raise red flags. Still, you can buy some of the furniture, pay it off the next day, wait a week*, and buy the rest of the furniture - which you pay off after getting the monthly statement. [<< Occasionally that is a good strategy.] * Give the computers time to process your first purchase and payment.

Answer 9

it DOES make a difference and the guy that said it doesn't is just plain wrong.

There's no way to give you ane xact point amount-- it depends on the rest of the picture-- but it will negatively affect your score.

If you can afford the extra $100, then pay it. maybe if you offer to pay the extra funds the creditor will agree to delete it from your report? Worth a shot.

Answer 10

If it's not yours, then DO NOT PAY IT!

Dispute it with the credit grantor AND the credit reporting agencies.