Is it better to....(credit question)

[sg784]

Settle an account in collections, or pay in full.

Better for the credit score, not for the checking account!

Anyone?

[Ackray]

I don't know, but I would think it would be better to pay in full.

[N8'sMom]

Did you already own up to the charges?
Acknowledge that they are your charges?

Also, how much is the debt?

[sg784]

Medical bills in collections.

8 of them total under $1000

I didnt come out and say "yes im responsible for this"! if thats what you mean. I just read it on my credit report and i KNOW im responsible for them

[greeny]

I could be wrong, but it seems like the best and quickest way to get your credit in order is to pay off anything you can as soon as you can. So, if I had the money, I'd pay it all right away rather than try to work out a payment plan.

[sg784]

I dont need to work out a payment plan, i can pay it right now. (tax return) however, for example if the bill is for 300 and they offer me a settlement of 150, should I pay the 150? or should I say, no I dont want to settle, I want to pay in full.

KWIM?

[N8'sMom]

If it's already taken by a collection agency, they
are just looking to get money. And sometimes
they will take so much on the dollar and settle.
From my understanding, if they do this, they cannot
put that on your credit report because they took
the settlement as "paid in full".

[dawn1221]

Originally Posted by sg784

I dont need to work out a payment plan, i can pay it right now. (tax return) however, for example if the bill is for 300 and they offer me a settlement of 150, should I pay the 150? or should I say, no I dont want to settle, I want to pay in full.

KWIM?

I think I have the answer to your question:

You should never take the charge off amount if you can afford the full amount because it WILL LOWER your credit score.

[Petersmamma]

If it is in collections, it has already damaged your credit score. That's irreversible (i.e. paying in full won't reverse the damage done from them being in collections).

At this point, the company (not the collectors, but the originators of the debt) assumes they have lost that money. That's why they sent it to a collections company.

You now have the power to negotiate. Granted, both the collectors and the original company want you to pay in full, but that's because they both get more money that way (the original company isn't going to get the full amount at this point even if you pay it, because they have to pay the collection company. And you won't be able to deal with the company directly, you will have to deal with the collectors). However, they don't expect to get ANY of it. So, if you can pay SOME of the debt right now, you can strike a deal. You can often settle for pennies on the dollar.

If you have the $$ to pay in full, you should because you made those debts and you have an ethical obligation to do so. However, if you do NOT have the money to pay in full, you can definitely negotiate a settlement.

Honestly, at this point, I don't think that either option is "better" for your credit score (paying in full is probably slightly better) because the debts are in collection and have already beaten up your credit score.