Credit reports can be considered adult report cards. Loans, employment and rental agreements are based on your credit score. The ability to pay off a credit card shows your reliability to pay back other loans. Sometimes settling a credit card debt is the only alternative. Before you settle a credit card you should understand the effect it could have on your credit standing.
Facts
Having a account as "Settled" or "Settled was 30 Days or More Past Due" will inhibit your chances to obtain credit in the future.
Benefits
You can settle your credit card balance and negotiate your credit rating. Credit agencies and collection companies are willing to delete or erase all negative notations associated with the account and state the account as paid in full instead of "Settled."
Misconceptions
After settling a credit card debt you are no longer responsible for the balance. Credit card companies can legally send the remaining debt to a collection agency, though, if the agreement is not in writing.
Significance
The credit rating you negotiate depends on how a settlement will affect your credit.
Considerations
Settling credit cards are only beneficial if you have a very high balance and APR, or if you're in a hardship situation. Get all settlement offers in writing on the company's letterhead.
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