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Will a Settled For Less Than Agreed Hurt My Credit Report?


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Hello all. I am in the process of settling an account for a personal loan. The bank has already agreed to indemnify me or pay me back the settlement amount if another lender demands payment on this account in the future. The bank agreed to do this because it cannot find my original promissory note for this account.

However, the bank refuses to report this account as anything but "Settled For Less Than Agreed" to the CRAs. I've read the "Good Credit is Sexy" book and I've suggested all the tips printed under the "Negotiate Your Credit Rating" section on page 157 (i.e. agreeing to change a listing based on a new settlement agreement, etc.) but to no avail. My attorney refuses to counter by suggesting other options for the account such as "Paid" only with all other negative notations deleted, "Settled" only with all other negative notations deleted, etc. and the bank claims that they are legally required to report "Settled For Less Than Agreed" only. Hogwash.

Will this "Settled For Less Than Agreed" hurt my credit report? The bank claims that this status is better for my credit report but, at the same time and according to my lawyer, the bank will not put this assurance in writing in the settlement agreement.

What are my alternatives? The CRAs have already deleted this account from my credit reports.

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