Settled Account
CreditGlossary term
Definition
A debt that has been resolved by paying less than the full amount owed, typically through negotiation with the creditor or collections agency. While settling a debt is better than leaving it unpaid, a settled account on your credit report signals to future lenders that you did not fulfill the original terms of the agreement. Settled accounts remain on your credit report for seven years from the original delinquency date.
Related terms
- CollectionsThe process by which a third-party agency attempts to recover money owed on a delinquent account that the original creditor has given up trying to collect. Having an account in collections severely damages your credit score and stays on your credit report for seven years from the date of the original delinquency. You have legal rights under the Fair Debt Collection Practices Act regarding how collectors can contact you.
- Charge-OffA declaration by a creditor that a debt is unlikely to be collected, typically after 180 days of non-payment, which is then written off as a loss on the creditor's books. A charge-off is one of the most damaging items on your credit report and remains there for seven years. Even after a charge-off, you still legally owe the debt, and the creditor may sell it to a collections agency.
- Credit CounselingA service provided by certified professionals who help you manage debt, create a budget, and develop a plan to improve your financial situation. Nonprofit credit counseling agencies can negotiate with creditors on your behalf to lower interest rates or set up a debt management plan. Reputable agencies are accredited by the National Foundation for Credit Counseling or the Financial Counseling Association of America.
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