Joseph V asked: I have a debt that is being charged off. They are offering a settlement, but if I pay it in full or settle, it still will show as charged off. How much much will each option effect my credit rating? Will it be the same either way since it is charged off?
Answer: I would take the settlement if I were you. If the account goes to a 3rd party collection agency your credit report will show both a collection and a charge off on two different trade lines; one from the lender and the other from the collection agency. The combined effect will be worse than either one alone. As far as I can tell, collections and charge offs are weighed the same. Its the number, age and outstanding balances that matter. Take the settlement before it goes to collection, or worse, a judgment.
