Will this hurt my credit more?

[Honduh]

After highschool I had an awesome paying job for someone my age and I had a credit card and had no problems paying it. Then after a few years of being out of school I decided I wanted to do something else with my life and went to a trade school. Well I went to school full time and it took up most of my day and I had to work 3rd shift part time to even come close to making my bills and being able to feed myself with ramen noodle 7 days a week and get to school everyday. Unfortunetly my credit card suffered from this and I ended up not being able to afford to pay it for quite some time and it got very high above my limit. After I graduated I finally contacted them after it had gone to a collection agency and set up a payment plan to be withdrew from my account every month and they had to record my conversation and everything, I felt like a true lowlife.

Well now I owe about 700 still on it and they have been trying to get me to settle for a lower amount for quite some time but I was afraid it would hurt my credit even more if I did. Today I got a letter from them saying they will settle for 280 and it will be over with.

My concern is if this will in fact hurt my credit even more then it already is. Or if it will just stay the same? I've asked a few friends and never got answer saying it will and won't. So does anyone know for sure how this will work? Its not like I can't afford to keep making my monthly payments and I havent missed one in the past year. I figured they would rather get all the money back rather than just settle but it would be nice just paying the lump some now and not having them pull from me every month.

[gpzjack]

I would think that they have already filed with the reporting agencies and if you just pay it and settle it won't hurt it anymore. Try looking around for some forums on it..i'd bet you could get an answer real quick. I have a friend that destroyed his credit...he got everyone settled...then started a business with a tax id # and had instant credit with that...his personal credit is still a mess but he gets everything with his tax id # now.


Gotta watch your credit people...it can really screw you later...my sis filed for bankruptcy at 20 and is still paying for it.

[NOPSTNS]

yeah u already shot urself in the foot, did u say u went OVER ur limit? whoa man. just pay the money they will settle for and cut up that credit card....thank god its only a few hundred now man, i owe multiple cards....in the thousands.

hope it all turns out ok for ya man

[TrboChicsRock]

Yes, it will hurt your credit more. If you settle, a permanent record of the settlement will show up on your credit report. Everytime someone checks your credit report, that will show up for the rest of your life.

If you pay the full balance, your credit score has already been damaged but at least there won't be any record of it on your report.

It may seem like a great deal right now, but in the future when you're trying to get low interest rates on a car/mortgage you're going to wish that you paid it off.

[WhiteXFire]

Is the card already cancelled and you're only dealing with the collection agency? If so, pay it off and be done with it. It's already reported as a "collection", and having a fully paid collection is much better than showing that you still owe on it. If you settle with them, it'll basically show that there was a collection, there's nothing currently outstanding, and will probably say something like "Paid P&L". If the card isn't cancelled and it's just a separate issue, do the same thing but don't automatically cancel the card. Several of the factors in credit score are length of credit history and available/debt ratio. So, if this was your first card and nothing else is 7 yrs old, it can hurt as well as reduce your available/debt ratio (assuming you're not carrying a balance on the card and you have other balances).

[Honduh]

Yeah the card was canceled. I know my credit is rather screwed at the moment and I really don't want to hurt it anymore and my next goal in life is to try and fix it.

So I'm still getting mixed responses from everyone. So maybe cliff notes will help.

Cliffs:
Had credit card for awhile.
Went to school.
Went over limit.
Missed payments.
Went to collection agency.
After school made a payment plan to pay off debt.
Paid off well more than half of it.
Now have 700 left.
Collection agency offered to settle for 280.
Settle or keep paying?

[LS2GTO]

How do you sleep at night owing thousands on credit cards...wtf. I would just shoot myself.

[Honduh]

Yeah it sucked at the time, but I had to make end meets while in school, and I had to compromise. I was 20 and had been supporting myself since I was 17, I had no one to help me out.

Can anyone give me a 100% sure answer?

[sexytt]

Originally Posted by Honduh

Yeah it sucked at the time, but I had to make end meets while in school, and I had to compromise. I was 20 and had been supporting myself since I was 17, I had no one to help me out.

Can anyone give me a 100% sure answer?

Keeping making the payments on the total you owe. Like others have stated it will look "better" on your credit report. Also cancelling credit cards isn't a good idea also. Although collection agencies and missed payments(90 days past due) are key factors to your credit score, also your credit/debt ratio is key. Meaning if you have a 5k card and owe 3k...you have 2k worth of credit. Don't cancel cards, keep them and pay them off. I'd also suggest getting another card(if you can). Just have some poise and not use it. Gl with rebuilding your credit.

[ITSTOCK]

Ask them IF YOU SETTLE if they will delete the collection from your account. VERY OFTEN THEY DO. This means that the collection never happened. Whatever you end up doing, GET IT IN WRITING FROM THE COLLECTION AGENCY.

A paid in full account, or a settlement account, has little to no effect on credit score (in comparison with each other). I'll type more later.

[Broken5hift]

Originally Posted by ITSTOCK

Ask them IF YOU SETTLE if they will delete the collection from your account. VERY OFTEN THEY DO. This means that the collection never happened. Whatever you end up doing, GET IT IN WRITING FROM THE COLLECTION AGENCY.

A paid in full account, or a settlement account, has little to no effect on credit score (in comparison with each other). I'll type more later.

^what he said. you should call them up and ask them yourself. ask them what has been put on your credit score, what does it mean, and what you can do.

[Honduh]

ok thank you very much guys!