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Yes, settling a debt instead of paying the full amount can affect your credit scores. When you settle an account, its balance is brought to zero, but your credit report will show the account was settled for less than the full amount.

What percentage should I offer a full and final settlement? It depends on what you can afford, but you should offer equal amounts to each creditor as a full and final settlement. For example, if the lump sum you have is 75% of your total debt, you should offer each creditor 75% of the amount you owe them.

Settling an account is considered negative because it means the debt was not paid as agreed. However, settling an account is better than not paying it at all.

It depends. If its the only collection account you have, you can expect to see a credit score increase up to 150 points. It depends. If its the only collection account you have, you can expect to see a credit score increase up to 150 points.

When you pay or settle a collection and it is updated to reflect the zero balance on your credit reports, your FICO® 9 and VantageScore 3.0 and 4.0 scores may improve. However, because older scoring models do not ignore paid collections, scores generated by these older models will not improve.

Aim to Pay 50% or Less of Your Unsecured Debt If you decide to try to settle your unsecured debts, aim to pay 50% or less. It might take some time to get to this point, but most unsecured creditors will agree to take around 30% to 50% of the debt. So, start with a lower offerabout 15%and negotiate from there.

It is always better to pay off your debt in full if possible. While settling an account won't damage your credit as much as not paying at all, a status of "settled" on your credit report is still considered negative.