Until five years ago, I had been having horrible credit problems. I stopped paying everything from the past, and started living without credit, spending within my means. Almost everything has fallen off my credit report, since most are over 7 years old. I have one bad account that is only five years old. I received an offer to settle from a collection agency (not the original creditor) for 50%. My question is, will taking advantage of the settlement offer “reset” the seven-year period on my credit report (showing I settled for less than the amount owed for the *next* seven years)? Or will it just show as paid, and fall off in two years? If settling will reset the seven years, I just won’t pay it and I’ll wait for it to fall off in two years.
Should I accept a settlement offer from a collection agency?”
When you accept and pay the settlement it should be reported that the amount you paid in the settlement as paid and the amount forgiven as a bad debt. Regardless this should fall off your consumer credit report no longer than 7.5 years from the time it was first reported delinquent by the original creditor.
If you do decide to take them up on their offer, be sure to get the agreement in writing before you send the payment and keep that letter in a safe place in case someone tries to collect the balance later.
While it sounds like you are doing a good job of living within your means now, I’m concerned that you have not done anything to rebuild your credit. A good credit score leads to less expensive insurance and financial products you may need in the future like a car loan or mortgage. Please read my guide to help you easily rebuild your credit.
Please post your responses and follow-up messages to me on this in the comments section below.