Person using calculator

Consider the Credit Score Downside of a Settlement


Many consumers choose to settle their debts for less than what they owe. In the lending world that practice is often referred to as a "debt settlement." But while your balance may be paid off, and the account considered to be paid in full, your credit score may still take a hit. If the creditor reports that the account was delinquent and then settled for less than the entire balance, that is seen as a serious negative entry on your credit report. When you negotiate a settlement, make sure the creditor will simply report the account as "paid in full" if you can. Even if the creditor does not agree, settling the account for a lower amount may still be the right choice, but keep in mind it likely will affect your credit score and your ability to qualify for or get credit on decent terms, at least for a few years.

Personal – Saving, Planning & Budgeting

Ready to explore how Sunflower Bank can assist you? Speak to a personal banker at a branch near you, contact a specialist on our Wealth Management team, or find the right financial partner on our Commercial Banking team for your business needs. 

Back to Resource Articles

This article contains general information only. Sunflower Bank is not, by means of this article, rendering accounting, financial, investment, legal, tax, or other professional advice or services. This article is not a substitute for such professional advice or services, before making any decisions related to these matters, you should consult a qualified professional advisor.