Quick Question...Kinda

Paying in full will help you on a manual review of your credit compared to settled.It will take a while to heal your credit either way you go.

Congrats on being payday loan free!

Any future lender/creditor will look on "paid in full" as better than "paid in settlement for less than owed". But if you haven't paid in a year, chances are good that these debts are already in collections, right? If so, there has already been significant damage done to your credit rating. If you have the means to pay in full, then do so - if not, take whatever settlement you can get. A paid collection is at least paid.

I was thinking that maybe the payments over a longer time would look better as it would put me back on schedule. I was just thinking that buy reaching a settlement to pay it in full would rid me of the bill all together thus eliminating it all together. Thanks for the input!!

Since it is already charged off you are better off to do a one time payment for a settlement. If you make payments to a collection agency over time it will not reflect on your credit report until the final payment. Once you make the final payment it should show up as settled in full for less than amount due which is the exact same thing you would get if you made a one time payment for a less than amount due. The only way to have it not affect your credit is to pay them the full amount due including penalties and interest which is highly unadvisable since probably 25% of what you owe is all junk fees. Basically you would be giving them an extra 25% just to up your credit score a bit. For example if you owe 10k in debt and you can settle it for 5k and keep the other 5k I think you are in a better position than if you paid them the full 10k.

I think you are always better off to keep your money in your pocket as opposed to falling into the credit score scam. You do not need credit cards to improve your credit score. You do not need a monthly payment on a credit card to improve your credit score. You do not need an annual fee high interest rate card to improve your credit score. Basically your credit score will improve if you settled the bad debt and you can also increase it by getting a secure loan on a car or house.

If your credit is really bad I would go for a car first since it is easier. Save about 20% of of the value of an inexpensive used car and try to work a deal. For example, I would try to buy a car for around 5-6k and have a down payment of 1-2k. By having the down payment it will insure that you get a decent rate on your loan. Do not let them sign you up for a credit card rate on a secured auto loan. If they want more than 10% on the auto rate then they are screwing you. Also, do not let them over charge you for the price of the car do to mediocre credit. Make sure to check kelley blue book or equivalent for the general price of the car you are looking at prior to signing any aggrements.

If you settled all your debt and make payments on a car for about a year your credit score should be in the 500-600 range which is good enough to get a larger loan on a house and the only reason anyone really needs credit is to buy a house. Again save your 20% and use that to get a fixed rate conventional loan on a house. The current rate is around 6%.

You make a lot of sense. I think I am going to start (or at least try) to set $300 a month aside. Then start with my lowest balance and work my way up form there once I have enough money to make an offer of settlement and can pay them instantly. I figure if I start small I wil lhave a sense of accomplishment and it will help me stay motivated to get this all fixed. Thanks all for your input.