Should I settle my debt or pay off with original creditor?

[slipperywhenwet]

Hello, I have just one question,

I have been paying the debt directly every month to the creditor, I was notified by a collection agency to settle with them. I was never informed by the creditor I was being turned over to collections

If I settle with a collection agency is the rating worse on the credit report then if I had continue to paid what I can monthly to the creditor (they are still excepting my payments)

Ex: I am listed as a 4 rating, wouldn't that get change to: Settlement- paid in full , Same as a 9 , worse rating ?

Thanks for all your help

[Credit Expert]

Good Question SlipperyWhenWet,

It depends.


If the account is delinquent with the original creditor, paying it off but being late every month is worse then settling it because you will continue to accumulate late payments. Also, the collection agency may also be reporting negative simotaneously. A settlement is a negative but owing a past due account is equally as negative. I honestly cant tell you which is worse with the description you sent me. If you settle you may be responsible for the forgiven debt as taxable income when you file taxes next year. I would recommend attempting to settle the account but getting an agreement that they are willing to REMOVE the item in it's entirety PRIOR to you settling. Simply ask them for the agreement before you send them any more money and chances are they will agree if your persistent.

I’m not sure what status you are referring to. “R 1-9” status is just one way that credit scoring companies score reports. There are thousands of different companies and scoring models so I can really guess where you are getting your data so I recommend you be more concerned with the big picture such as credit FICO scores, debt amounts, payment history, types of credit etc…..

Was this the answer you were looking for? Feel free to contact me if you need additional assistance. Keep me in mind if you or someone you know is in need of Credit Improvement Services. I can help solve difficult credit problems and increase your credit scores so you can qualify for lower rates and save money. In this case, I may be able to completely delete the item you are referring to so you wont have to worry about the rating of the item.

[Credit Expert]

Try http://www.creditagenda.com for credit improvement help.