Will it help my credit to settle?
I received a letter from one of the cards I owe money one. They said they will accept half of what I owe and will consider the cost of the debt paid off in full. If I take this offer, will it help or hurt my credit score?
It will be listed as a negative. While it won't be as bad as not paying it off at all, it will not be as good as paying it off in full. Some say that regardless of if you pay them or not, your scores are already screwed over. By the time a debt collection agency took over, your scores are unchangeable in most cases so it likely won't help your scores at all.
I was curious about this too. I got my first request to settle. So even if I do pay the debt, it has already took away points and won't help anything?
What would be the point of paying back the debt then?
I did this once and nothing changed because I was already late several months. I think I didn't make a payment on one card for nearly 18 months. Even after I paid it off, my scores stayed the same.
jerald: It will be listed as a negative. While it won't be as bad as not paying it off at all, it will not be as good as paying it off in full. Some say that regardless of if you pay them or not, your scores are already screwed over. By the time a debt collection agency took over, your scores are unchangeable in most cases so it likely won't help your scores at all.
This is correct. The issue people run into is that by the time a settlement is offered, a collection agency already has the bill and it is written off by the credit provider so they will get some return for their loss. Most don't like to wait to turn it over either. I think some will only give you 3 months max to make payments before they hand things over.
If the bank still holds the credit debt, it will. But by the time you are asking to settle, this almost always means that a debt collector has the owed contract and it will do nothing for your credit score.