Every bit of the credit will stay on your credit report for at least 7 years, good or bad. It’s the law.
It shows your history. When you “settle”, your credit report reflects that. It is better than a charge off, which means you did not pay. Settling means that you paid for less than the full balance. Not the best, but better than not paying.
You will most likely be able to get a new cell phone contract, if you want, but they will require a deposit (a couple hundred dollars most likely). Or you can go with the pay as you go type of cell phone.
The only thing that truly helps your credit is to (1) pay on time and (2) wait it out. You need to repair the damage as much as possible, by paying what you owe.
Credit reports are not there for you. They are there for your potential creditors to look at your payment history and use of credit in the past (how did you do with other companies and their money) before they decide whether or not to take a chance on lending you money (extending you credit), what interest rate to stick you with, the terms, the down payments (deposits) required, etc. The whole thing is there for them, not for you.
That said, you must make the record as accurate as possible. Get anything negative removed 7 years after the last activity. Put it in writing, send it registered mail to each of the three major credit bureaus (they all have separate info and scores, depending on how the companies do their reporting) and keep copies of everything. Bankruptcy is allowed to stay for up to 10 years on your record before it will be removed.
The 7 years is from the last activity, not when the account was opened.
Thanks for the good information!
I have a follow-up question. I have several charge-offs, and 2 credit cards that will charge off if I miss one more payment. I could settle with one and keep paying the other.
So, the charge-offs stay on my credit report for 7 years, right? So that’s not different than filing bankruptcy in terms of length of time and how bad it looks on my credit report. Right? Or maybe BK is 10 years.
In addition to that, I have:
- One card I could settle.
- Another card with a balance of $12,000 that I continue to pay off.
- Plus there are medical bills for about $1100.
- And back taxes of about $8000. ( I know I have to pay those).
Will my credit report be worse for a longer period of time if I don’t file BK?
My income is very low and I am also applying for disability. This is an enormous amount of pressure, needless to say. I want to know if there is any advantage to my credit rating if I don’t file BK. I understand the joy of paying everything off. But if there is no advantage to my credit rating, and I’m disabled, then BK may be the route I need to take.