Paying off a creditor

fivetimes

Hi, looking some advice if anyone can help please.

I had previously been on a Debt Management Plan. I have now got my head above water. I now owe just one creditor with a sum of approximately £1,000 which i am paying £20 per month.

A debt recovery agency bought this debt over so i am paying this to them. They do offer a discount if paid in one sum. If paid in full it will be marked as 'paid in full & final settlement'. If paid with discount which they do offer, it will be marked as 'partially paid'.

My question is, am i better to save myself a few pound by accepting discount and have it marked as partially paid or should i pay the full amount and have it cleared.

How does each of these options affect your credit score/file??

Thanks

stator

Are you planning on applying for credit any time soon?

If you have any ideas about getting a mortgage in the next six years then I would try and pay the whole thing back, if possible. But if you don't and have no real use for credit, then you might as well go for the lower payment.

jamesd

Full and final is less harmful than partial. Showing that you did fully repay the debt beats showing that you didn't. Getting the account closed and off your credit file as soon as you can will matter more than either. If partial gets the account closed six months faster than full, you'll probably do yourself more good with the partial. If you've the money to do either and want to maximise credit benefit, go for full.

Full is the way to go if you want to apply for more credit within the next six years, before it leaves your report. Taking longer than desired but repaying it all looks a good deal better to a potential new lender than not paying it all.

Tixy

Presumably the account shows as defaulted on your credit file?

Remember that whatever it shows (fully or partially paid) it will only show this for the remainder of the 6years since the default date shown on file.

So if the default is already, say, 5 years old then the whole record of the debt and whether you paid in full will only be on your file for 1 year anyway.

fivetimes

Tixy wrote: »

Presumably the account shows as defaulted on your credit file?

Remember that whatever it shows (fully or partially paid) it will only show this for the remainder of the 6years since the default date shown on file.

So if the default is already, say, 5 years old then the whole record of the debt and whether you paid in full will only be on your file for 1 year anyway.

Tixy, thank you for your reply. I can tell you that the debt was defaulted 08/2010, so it is approaching 5 years. I don't intend to apply for any credit in the near future, i already have a mortgage. Do you know what happens to this debt after the six years since the default date shown on file? Would i be best just continuing paying my £20 per month to the debt collection agency then offer a low final settlement?
Your knowledge is appreciated.

rizla_king

May as well accept the discount or hang on. You will lose this from your credit file in August whatever you do so makes no real difference.

Only risk in leaving it is if they decided to go to court.

dumpyboy

fivetimes wrote: »

Tixy, thank you for your reply. I can tell you that the debt was defaulted 08/2010, so it is approaching 5 years. I don't intend to apply for any credit in the near future, i already have a mortgage. Do you know what happens to this debt after the six years since the default date shown on file? Would i be best just continuing paying my £20 per month to the debt collection agency then offer a low final settlement?
Your knowledge is appreciated.

If you do a low final settlement it would only show for another year you will still have to pay the 20 pound a month after the 6 years it will just not be reported to cra