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TheDecorousfashion

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Closed as Derogatory vs. Sent to Collections
Hello All,

I have a credit card for which I owe $1,170. It has recently been closed as Derogatory. I got a letter in the mail stating that it will be sent to collections if it is not paid within 30 days. If it is sent to collections, will that further damage my credit score?

Also, would it be better to take a settlement or pay it back in the full amount?

I have never had credit issues before this I really just want to get my score back on track.

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Further damage will occur if you don't pay it. The account at hand will become a "charged off" account, that alone will cause further damage. In addition to that, a collection account will most likely be appearing on your credit report not long after in addition to the "charge off" which will bring even more damage to your credit. Not much difference between "settling for less" or paying in full, but obviously paying in full will look much better under manual review of your credit report if that would occur for some reason. Note that this collection may already be in motion to charge off status whether you pay it or not, I am not sure of the time frame of your account. If you can pay this, I advise that you get it paid asap, it will prevent you a lot of further problems.

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On March 2nd they said I have 30 days before the credit is assumed by the collector. I have the money to make the payment. I just really want to know if paying as a settlement will hurt me. In which case I would much rather pay in full. Which would you recommend?

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Paying in full would be of greater benefit. As I said, scoring systems wouldn't know the difference, but under manual review, where a person is looking at your credit report, paid in full would of course look much better. As said, do this asap.

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