Debt settlement - installments or payment in full

I would say that if you continue to make payments in full, as the late payments get further in the past, the likely your credit score will go up. Doing a debt settlement will just reverse the good you have done by keeping the payments current.

Credit scoring model give much importance on regular and on-time payments. The model reveals that 35% of your score is counted from your payment habit. So if you continue paying installments that might help you raise your score. However, if there is any derogatory mark on your report that could be removed by a payment in full, you should go with it. Are you under consolidation program? You can ask your counselor for more help.

Sorry, I completely misread the original post. Sorry. :)

Stella, I am not on a debt consolidation program any longer. I am doing this on my own. I have made arrangements with creditors, also have done settlements on a few of my accounts for a smaller amount. Since I have some additional funds available at this time I was going to pay off a few more credit card bills that have some negative payments on them (since they are joint accounts), and wanted to see if this will help or hurt my credit.

Maintaining on-time payment can only help you if the accounts are with positive status. Since you have some extra funds, I would suggest you paying it in full and remove the negative remarks of your report. Negotiate with your creditors so that they report it as paid or paid as agreed after payment. Please inform us how it goes.

You might like to PM Jessi, she has repaired her credit by her own and raised her score.

Yes, I'm doing it all on my own...I'm a little too obsessive to trust someone else with it..lol

My score still has a ways to go, but I'm using every bit of information I can gather to improve it more...

Payments in FULL are going to be better. Settled will leave a bad taste in your credit file until it eventually falls off.

your credit score goes up as you pay on your balances that run in cycles "monthly". your score is based on debt pay off ratio. when you make monthly payments versus paying off balances in full, your credit score goes up a few points. When you pay off a credit card in a lump sum, or any kind of unsecured debt, your not showing any payment history leaving your credit score lower than what it would be if you made payments monthly, taking a longer period of time to pay it off. ive heard this from many mortgage companies and loan officers.

That's correct Xris. However, if your credit report has negative entries, you should be attentive to remove it first. If payment in full will remove the negative, go for it. Otherwise installments are good, provided you do not miss payments. Hope that makes sense.

Stanley,
If there are some past due payments on a credit card and listed on my credit report and the creditor is not willing to remove those then are you recommending that I do not pay off in full?

thanks

[quote=stanley]if your credit report has negative entries, you should be attentive to remove it first.[/quote]

As per my understanding, you should try to remove derogatory items first. help, what are the status of the past due accounts? I'm sure these are hurting your score. If a payment in full removes them from your report, then go for it and insist your creditors to report it as paid. It will help you raise your score.

Unfortunately quite a few of these past due accounts have already reached charged off status and I am trying to work with the creditors to pay them off now and remove negative entries. Unfortunately most of them are telling me they will only do that if it is their error reporting the negative entry. Any suggestions?

Once an account is listed as charged-off, it cannot be removed. However, if you make it paid charged-off that might look good.

There is no harm in asking your creditor to report the account as paid, but you might have to pay a higher amount for that. You can negotiate with them, the success is uncertain however.

Do you know if these accounts are past SOL or not? Paying past SOL debt will surely restart the SOL clock. Hence go for payment in full, not installment.

Stanley, I believe that these accounts are not past the SOL. thanks

With that said, negotiate with your creditors and insist them to recall the charge off status. Often creditors report it as paid after a lump sum payment. But it depends upon the creditor you are dealing with.