Question concerning credit card reporting to credit bureaus "Settled" vs "Paid In Full"

This message was edited 2 times. Last update was at 07/20/2009

Is it possible to negotiate a credit card settlement and have them report to the credit bureaus the account is "Paid In Full" instead of
"Settled In Full" and " Settled for Less Than Full Balance" which means exactly the same thing - that the creditor "settled," receiving less than the full amount owed.
Any credit card reporting "Account Settled" is a big negative mark, correct?
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Highly unlikely. When you settle an account it's a severe negative hit and there's really no way around the damage it causes to your credit reports and scores. The only time an account is reported as paid in full is if the account was paid as agreed to in the original terms of the agreement. Obviously, a settlement means that the account wasn't paid as agreed according to the original contract.

On a side note, the only time it's a good idea to settle is if the account has already become severely negative (gone into collections for example). At that point the damage has already been done so settling isn't going to make it worse. testtest

dtempleton wrote:Highly unlikely. When you settle an account it's a severe negative hit and there's really no way around the damage it causes to your credit reports and scores. The only time an account is reported as paid in full is if the account was paid as agreed to in the original terms of the agreement. Obviously, a settlement means that the account wasn't paid as agreed according to the original contract.

On a side note, the only time it's a good idea to settle is if the account has already become severely negative (gone into collections for example). At that point the damage has already been done so settling isn't going to make it worse.

When you say "gone into collections" are you referring to a "charge off" at which point the credit card company sells the account to an outside collections company?
In my situation, with my five accounts being 4 or 5 payments late, the accounts have been closed and are in the hands of the credit card companies internal collections departments. The negatives at this point are the 5 credit card accounts reporting on the credit reports as 150 days late. Would it be better to bring the five accounts current and pay balance in full or do a settlement agreeing to only pay a portion of the balance? testtest

Once an account has been charged off, it's not likely that the lender will bring the account back to current. You can certainly ask and all things considered, it would be better than settling for your credit reports and scores... but again, I doubt they'll do it. Once an account reaches the point that it's been charged off, the next step is collections... which you should avoid if possible. A collection record will remain in your credit report for 7 years. And if you don't pay (or settle) a collection, it's likely the collector will take you to court and sue or file a judgment against you. If that happens... the judgment will stain your report for ANOTHER 7 years. As you can see, bad accounts can spiral into a nightmare of a mess for your credit so it's best to take care of the debts as quickly as you can. testtest

My five accounts are not charged off, just late 4 and 5 payments. They can be brought current by making minimum payment by next due date or paid in full by paying off outstanding balance. The negative marks so far are the reporting of 120 and 150 days late. At this point is it better to agree to a settlement for a portion of the balance or bring current and pay off balance? testtest

looney - if they haven't been charged off and you have the capability of bringing them current to save them, then do so. Yes, the 150+ day lates are killing your scores because you're 'currently delinquent'. Bring them back to current, save your credit and the older the negative payment history gets, the less impact it will have. As I mentioned in my first post, it's only a good idea to settle if your accounts have already gone into collections because the damage has already been done. If yours have not gone that far yet... then save them.

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