settlement offer...

[ShaggyDaddy]

so we got a settlement offer from one of the 3 derogatories on my report. It is about 1/4 as much as their highest offer and it is 1/2 as much as their next lowest offer.

The sum is *small* like under 200 dollars, we were holding out because 1) we own a home already 2) having no credit means we can't dig ourselves deeper into the hole 3) we see no need to borrow in the future... ever.

Now with the total being under 200 dollars we are considering paying it (it is an old phone bill that we were not able to dispute because we were young, not assertive enough, and not organized enough to fix it). Up untill now we were kind of holding out on principle, but now we are like... we probably would have been able to knock it down to this if we had been able to argue with the phone company anyway.

So my question is, once we settle this it is bad for 7 years right? is it worse than the derogitory that is already there? is it any better? There is no moral ground here for us to be guilted into paying this, it is only a matter of "what can this settlement do for me?" Any thoughts?

[rosie_plus_one]

I'm not 100% understanding the situation, but I think you should be able to settle with the company and have them report to the credit agency that the account was "paid in full." Just make sure you get that signed, in writing, before you send in the settlement amount. The paid in full status will definitely be better than a past due account on your credit.

And, although I respect your position that you will never need credit again, you may outgrow your house, or need to move for job/family/health reasons... etc.

Until I had about a $250,000 net worth, I wouldn't let my credit score go.

[velochic]

If you plan to never use credit in the future, then why are you worrying about your credit score and it being derogatory concerning this settlement?

[ShaggyDaddy]

Originally Posted by velochic

If you plan to never use credit in the future, then why are you worrying about your credit score and it being derogatory concerning this settlement?

yeah, sorry I was not clear Sorry, we see no need to borrow in the future, but who knows.

Every bit of borrowing we have ever done has been with this derogatory on our statement. Is a paid derogatory better than an unpaid one? I know that sounds weird, but we had plenty of cash to pay all 3 derogatories when we got our home loan a few years ago (3% down 6.0% 30 year fixed) and our mortgage broker said please don't... Do I have to wait 7 years after I pay it for any benefit at all?

[Petersmamma]

So, my dh just got fired : and we have oodles of cc debt from being young and dumb. We are paying it off. Once it's gone, we will NEVER EVER use a cc again. EVER. And I told my dh that finances are the big deal breaker for me....I can get over cheating easier than lying about money or getting us into debt again. But that's an aside.

So, while dh finds another job, our priorities are food, housing, utilities, gas in the car so I can get to work and dh to school, and clothing on our backs. EVERYTHING else is extra. If we have money for cc, we will pay. If not, then we'll try to work something out (not too hopeful with the idiots they have working, but whatever).

My reasoning is that we really really really are getting out of cc debt. And honestly, our plans are to either stay here in the house we own (paying off, but not renting) OR move somewhere and teach at a boarding school where housing is provided. Of course, plans can change, but right now, that's the game plan.

So, I figure that once my cc debt is gone, and my house is paid for, my credit score will be 0 (and anyway, if you listen to Ramsey, he always says that the FICO is an "I love debt score") and will suck. If I need financing for a house (the ONLY acceptable debt) I will have to get a mortgage through manual underwriting, where they look at employment history, money in the bank, etc. Right now almost ALL mortgages are just done via FICO score, but NOT all.

So, OP, this was all a long way of saying that your credit is probably f-ed up anyway, right? And you can later get a mortgage (if you need one) via manual underwriting. So, if you don't like what is on the table, what have you got to lose by not taking the deal?

[zersha]

I think if you pay this off, it will reset the last payment date, so it'll be on another 7 years. Unless you can make part of the deal that they promise to remove it from your credit report. But then I've heard of people doing that, and the company doesn't follow through with their end, so it depends on whether you can trust them or not.

Isn't it about time for this to fall off anyway? It won't stay on forever unless you make some payment on it. If they sell it to someone and try to reset the date, that's illegal, and there are ways you can have it removed without paying it. I'm not sure exactly how, but it involves sending a letter to the credit reporting agency disputing the bill, and if they don't provide the necessary information to verify the debt, it's taken off.

[zersha]

I just wanted to add...

There are other reasons for having good credit other than getting more credit. Insurance companies and sometimes prospective employers will look at your credit report. With the insurance companies, it can affect your rate. Which I don't think is fair...Grrrr! I think if you pay in advance, and have a good driving record, then that is all that should affect your rate. But I guess that's another topic. LOL.

[wombatclay]

Also, even though a mark may drop off your report after 7 years, the debt is still "out there" and different states have different laws about what can happen then. In some cases a lawsuit can be filed against you and if the judgement goes against you THAT will be added to your report/history. Depending on your experience with this particular group/the state you live in you may want to take the settlement as long as a "paid in full" status change is part of the deal.

[Oh the Irony]

zersha is correct in that it will reset the clock back to 7 more years of being reported.

good info at www.creditboards.com

how old is it now?

[ShaggyDaddy]

omg, I just checked my credit report and that derogatory is gone.

I think it has been 7 years, but I thought that if they have re-reported it the clock is reset... settlement offer is definatly not going to be persued for now, I will continue to watch my report.

[beachmouse]

Originally Posted by zersha

I just wanted to add...

There are other reasons for having good credit other than getting more credit. Insurance companies and sometimes prospective employers will look at your credit report. With the insurance companies, it can affect your rate.

And there are little ways it makes a difference as well. Our current electric company will waive what's normally a $200ish deposit to start service if you've got what they consider to be an acceptable FICO score.

[normajean]

If its a bill you truly ran up even though its old, you should pay it regardless. Being honest with yourself is more important than a credit score.

[aja-belly]

Originally Posted by normajean

If its a bill you truly ran up

it is not.

[velochic]

That's good that it's gone, SD. I'm glad it has worked out and now you can work on rebuilding your credit if you want to (and it sounds like it's not high on your to-do list, but one of these days you might find yourself in a position to need good credit, so don't totally forget about it). If you did borrow any money on that derogatory, I would still pay that debt, if you can, just because it's the ethical thing to do.

Your credit score is going to matter a lot over the course of your life whether you ever incur debt or not. Which is why I get so mad when I hear this:

Originally Posted by Petersmamma

So, I figure that once my cc debt is gone, and my house is paid for, my credit score will be 0 (and anyway, if you listen to Ramsey, he always says that the FICO is an "I love debt score") and will suck. If I need financing for a house (the ONLY acceptable debt) I will have to get a mortgage through manual underwriting, where they look at employment history, money in the bank, etc. Right now almost ALL mortgages are just done via FICO score, but NOT all.

I have (in the past week) been reading the drivel that this Dave Ramsey is putting out and it really makes me mad that he is telling people that FICO is about "loving" debt (I'm debt-free except for mortgage, and always have been, but my FICO is near the upper limit) and that your FICO score will be 0 (no... it will NEVER be 0 again because you are on the radar now) and that mortgage is the only acceptable debt (no it's not).

I can believe the idiotic things this guy is saying. :

[ShaggyDaddy]

Originally Posted by velochic

I can believe the idiotic things this guy is saying. :

consider the audience (at times myself included), a lot of "debt addicts" who can't really afford to keep falling into the well-laid traps that the american lifestyle is built around.

You don't preach to an alcoholic that a glass of wine every week is heart-healthy... even if it is true.

[Petersmamma]

Originally Posted by ShaggyDaddy

You don't preach to an alcoholic that a glass of wine every week is heart-healthy... even if it is true.

Exactly.

And you know, when you suddenly lose a good chunk of your income and think you won't be able to pay your cc bills if you want to....oh, I dunno....EAT, then thinking that your FICO is going to tank when you pay off all your debts (which most of us plan to do, BTW) is a lot more appealing than thinking "Oh, goodie! I get to have a shitty credit score and NEVER EVER be able to get a decent loan, insurance, job again"

[lmonter]

Originally Posted by zersha

Insurance companies and sometimes prospective employers will look at your credit report.

My SIL was rejected from a job she supposedly would have been perfect for because of her credit history (which isn't stellar to say the least). Would've paid more, too. So right now she's still stuck living with her dad and paying his bills (rather than her own).

[mrskennedy]

...

Originally Posted by lmonter

My SIL was rejected from a job she supposedly would have been perfect for because of her credit history (which isn't stellar to say the least). Would've paid more, too. So right now she's still stuck living with her dad and paying his bills (rather than her own).

Ok. Answer me this one... How the heck (and I'm being way nice here!) are you supposed to get a job if they look at your credit score and go ? That is wrong, to say the least! I mean, you can't pay off debts unless you have income...

'Course, you could just not give your SSN when the employer asks for it, then they can't look at your credit report. And yes, that's legal. It says on the SS card that SSN's aren't required to live or work in the U.S. And the IRS code book says somewhere--I haven't looked at it lately so don't ask me where--that only swearing U.S. citizenship is required. But do most people know that? No. So most people could get screwed out of a job just b/c of a bad fico score. Wrong wrong wrong, this. But it's not the only injustice here... And it's not the worst one either.

[aja-belly]

when i worked at radio shack a credit check was part of their hiring process.

[Petersmamma]

Originally Posted by mrskennedy

Ok. Answer me this one... How the heck (and I'm being way nice here!) are you supposed to get a job if they look at your credit score and go ? That is wrong, to say the least! I mean, you can't pay off debts unless you have income...

Also, what if you have bad credit because you have unexpected large medical bills....you got sick, the doc messed up and required you to have surgery, which YOU pay for, etc?

I kind of get the rationale behind checking credit for insurance and jobs, but the problem is that statistics are backing up these claims and people are not statistics.