I have several credit cards and am struggling to make house payments and credit card payments. If I make arrangements with a credit card company to pay the card off with a reduced amount, will that still affect my credit?
Negotiating a reduced payment with your credit card provider probably will have a negative affect on your credit scores.
When you negotiate a reduced pay off amount, you are actually settling the debt for less than you owe. As a result, the lender will likely report the account as “settled” rather than “paid.”
Anytime an account is reported as not paid in full or not paid as agreed, it will have a negative impact on credit scores.
Sometimes it is better to take the negative hit of a settled account to get the debt behind you. It shouldn’t matter if your credit scores are impacted in the short term because you really don’t need to take on new debt until you have gotten control of your budget and your spending. Then you can concentrate on rebuilding a strong credit history, which will help you get the best rates when you are ready for new credit.
Thanks for asking.
- The “Ask Experian” team