Does anyone here really know anything about Credit?

[glen]

Lets say you owe $4200 and they offer to settle with you for $1800, how bad does that look on your credit?

 

[DaWhim]

creditnet.com

 

[Vic]

Is this a collection or a credit card?

 

[glen]

Originally posted by: Vic
Is this a collection or a credit card?

Collection

from a credit card I once had

 

[dionx]

it's bad if you pay for it. it's like admitting you're guilty. if you ignore the problem for 7 years, it goes away from your credit report. say you ignored it for 3 years, then paid for some it, then it goes back on your credit report until the next payment or 7 years, whichever comes first. its preferable to just ignore it for 7 years.

 

[Vic]

Originally posted by: glen

Originally posted by: Vic
Is this a collection or a credit card?

Collection

from a credit card I once had

Well, the card account probably hit your report as a charge off, which is a big negative. But that might have been a long time ago. Which is the next question... how long has this been at collection?
If you accept the settlement and pay it, then the collection should close. BUT the last activity date on the collection will update to now, which could worsen your credit score temporarily, especially if this is an old collection. But if this unpaid collection is still on your credit report, it could prevent you from getting new credit regardless of score.

 

[Vic]

Originally posted by: dionx
it's bad if you pay for it. it's like admitting you're guilty. if you ignore the problem for 7 years, it goes away from your credit report. say you ignored it for 3 years, then paid for some it, then it goes back on your credit report until the next payment or 7 years, whichever comes first. its preferable to just ignore it for 7 years.

That's not entirely true. During that 7 years, an unpaid collection (especially one of that size) could prevent him from acquiring new credit, and will lower his score the entire time.

The most preferable option is to pay your debts as soon as you can. There's no mystery or secret to having good credit. Just borrow wisely and pay your debts.

edit: 12,000th post... damn

 

[NTB]

Does requesting a limit increase do anything score-wise? Just wondering. I would imagine a bunch over a short period, or a single *big* request would probably do something.

Nate

 

[Vic]

A credit limit increase will usually improve your credit score, by lowering your balance-to-limit ratio. Use it wisely.

 

[spidey07]

Originally posted by: Vic
A credit limit increase will usually improve your credit score, by lowering your balance-to-limit ratio. Use it wisely.

thank you once again vic for providing factual and helpful advice. There are so many false rumors floating around regarding credit.

 

[Descartes]

Originally posted by: Vic
A credit limit increase will usually improve your credit score, by lowering your balance-to-limit ratio. Use it wisely.

Don't forget the slight hit for a potentially hard pull 😀 Most grantors pull hards, don't they? I know at least MBNA and Chase do.

 

[JulesMaximus]

Really bad.

 

[Vic]

Originally posted by: Descartes
Don't forget the slight hit for a potentially hard pull 😀 Most grantors pull hards, don't they? I know at least MBNA and Chase do.

Well of course. Any inquiry associated with a new credit request is a hard pull. But inquiries really don't affect score as negatively as most people think. It really depends on how many and how often. If it's the first hard pull in a year, the score won't be affected at all. 10 credit card applications in the last month will drag it down, but the maximum effect is 10%. OTOH, a single recent 30 day late still past due can lower the score up to 35%, and being close to or over the limit on all revolving credit lines can lower the score 30%.

The issue for glen is that just having the collection on his report hurts his credit. And will make it almost impossible for him to get a good mortgage as long as the collection is still unpaid, even if it's 6 years old. Sure, he could get approved, but one of the conditions of the approval is that the collection be paid in full prior to close.

 

[glen]

What I need to know is it worth about $2000 to go from "Settled" to "Paid as Agreed"
and
Will they ever accept a "Settlement" but report it as "Paid as agreed?"

 

[Vic]

Originally posted by: glen
What I need to know is it worth about $2000 to go from "Settled" to "Paid as Agreed"
and
Will they ever accept a "Settlement" but report it as "Paid as agreed?"

No
and
No

"Settled for less than actual amount owed" and "Paid as Agreed" mean essentially the same thing on your credit report, i.e. the account has been paid and the creditor can't come back later claiming you still owe more.
If what you're asking is whether you should take the settlement offer and pay less or pay the full amount (with hopes of that looking better on your credit), then by all means take the settlement offer.
And might I add that I appreciate your honesty.

 

[milehigh]

Has anybody here had any experience trying to settle directly with the CC company BEFORE it goes to collections? I was once told that the company is only on the hook for 55 to 70 percent of the outstanding debt with the rest of it going to some sort of reinsurance.

 

[Dulanic]

Rarely does it help, either way it shows bad on a credit report. Only time it really helps is they will accept a payment for deletion. I still have $74 due on mine, from TCF bank screwing me over, and I flat out said I'm not at fault with this, but I will pay it in full IF you delete it off my credit record. I said nope, what good will it do. It has been on there for 3 years, IF I pay it, it will stay on for another 7 years half the time because they will reage the account. Or if I dont pay it, it will fall off in 4. There is no good reason to pay especially since they are at fault for this money owed not me, if I pay it will do nothing but hurt my credit if they reage the account.