Expert: Regan Shinski - 11/6/2009

Question
I have reached a settlement with a credit card for approximately 70% of the balance.  I had a difficult 2008 and was put on a payment plan.  I called and requested a settlement and after discussion, we agreed.  It is to happen tomorrow.

My question is....will this hurt my credit score or should I have stayed with the payment plan(which would have taken another 1+ years) to pay off.

many thanks for your time!!!!

Answer
Hi Tonya:

I can't answer that because I don't know the terms of your settlement and original contract.  In general, we advise or when we settle accounts for people, we put the credit terms in the settlement contract.  Is it too late for you to do that?  If it is not specifically addressed in the settlement contract, you are really at their mercy and they likely would default to the original contract terms on that matter.  This likely means reporting it as settled for less than balance due.  Sometimes they only put it in the "comment" section which not not affect your credit score, but is viewable to all creditors that pull your credit.

Good luck.  Congrats on the settlement for less than full balance.

Regan
mbscompany@aim.com