Settling vs. Paying Off a Collection?

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Bobzig
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Settling vs. Paying Off a Collection?

Postby Bobzig » Fri Aug 10, 2012 2:00 am

Is there a difference between settling and paying off an entire collection's balance? :confused:
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djrez4
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Postby djrez4 » Fri Aug 10, 2012 10:50 am

Both show up as a derogatory mark on your credit record. I think a settlement would reflect more poorly on a report than a full-pay. If I was a creditor, I'd certainly consider a settlement to be worse.
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Crashem
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Postby Crashem » Sat Aug 11, 2012 3:02 am

FICO wise, on a correctly reported collection account, it doesn't make a difference if a collection account is paid off in full or settled for less or even not paid at all. They all hit FICO score the same amount and way. They will all effect your FICO score for the same amount of time. Personally, I would always be asking for a PFD (pay for deletion). Remember FICO score isn't everything when it comes to credit approval. There are some creditors and/or products that require any outstanding collections to be settled. In those cases, I don't think it makes a difference if it is settled for less or settle in full. I guess under manual review, settled in full looks better. But I doubt it is worth the money for the difference it make reflect on you during manual review.
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