How to Settle Credit Card Accounts & Credit Scores

Settling credit card accounts, and thereby improving your credit score, can be accomplished with only a few short phone calls and letters. Collections agencies and credit card companies tend to use intimidating language that give the impression that the only method to discharge a debt is to pay it in full, but the reality is that all debts are entirely negotiable. Get all agreements with your creditors in writing and you will be well on your way to a high credit score.

Instructions

1

Order your credit reports from the three major credit bureaus (Transunion, Equifax and Experian). Look at all your credit card accounts and check for any that are late, delinquent or charged off to collectors. Your credit reports will have contact information for each creditor listed next to the account entry.

2

Contact your creditors with which you have late or delinquent accounts. Credit card companies are not likely to provide you with a favorable settlement unless your account is at least 60 days late. If your account is current, they have no real incentive to settle the balance of your credit card. You may contact your creditors by phone, but request that any agreements you make be provided to you in a letter.

3

Request a "pay for delete" for the late or delinquent account in return for a payment of at least 10% of the existing debt. If the person you talk to on the phone balks at making a deal, ask that they transfer your call to a supervisor with authority to settle debts. Once you have arrived at an acceptable settlement, request that the agreement be mailed to you. Once you receive it, send payment as requested along with a copy of the agreement. Check your credit report later to ensure the entry has been deleted.

4

Ask for a "paid in full" settlement if the creditor refuses to delete the entry from your credit report in return for a settlement. You will not be required to actually pay the account in full to get this entry on your report. This will boost your credit rating less than getting the entry deleted, but it's better than nothing.

5

Request a "pay for settlement" if the creditor declines to delete their entry from your credit report or refuses to change their entry to "paid in full." This will be less beneficial to your credit score, but it will be superior to leaving a delinquent account unresolved on your credit report.

6

Monitor your credit report to ensure that your creditors have updated their entries according to the agreements you achieved with them. If they don't update their entries within 60 days, or update them incorrectly, file a dispute with each credit report where the errors appear. Each of the credit bureaus provides a web form for filing an error if you look at your credit report online. If you receive your credit report in the mail, follow the error disputation instructions included. Send copies of your debt settlement agreements, if the credit bureaus request them, to support your dispute.