John Ulzheimer is a nationally recognized credit expert and contributor to On the Money. Learn more at Credit.com or JohnUlzheimer.com.

Q. Once a settlement amount is arranged with a creditor, how is one's credit score affected when the consumer does a settlement payment of the balance on the account, but leaves the card open? Is this a good idea to pay the settlement amount or pay the whole balance off in full? I want to increase my credit scores. –Ivy

A. Hi Ivy - Settling an account will not help you increase your scores. In fact, the opposite will happen. A settlement is considered to be a seriously negative event by credit scoring models because the lender is not getting paid back according to the terms of the original agreement you signed with them. Once they report the account to the credit bureaus as being “settled in full” your scores will suffer for the next seven years.

If you want to improve your scores then I’d suggest skipping the settlement route. If you have the ability to pay the debt in full then you should do so. You also might want to double check with your credit card issuer that they intend to allow you to keep that card open after your settlement. That would be atypical of them to allow you to continue to use the card and possibly run up a new balance so soon after they took a loss on the deal. Be sure you’re not just getting “sweet talk” from one of their collectors trying to convince you to cough up some dough. It wouldn’t be the first time. GET IT IN WRITING!! -J.U.

Q. I show a delinquent account from Equifax on my credit report. How can I contact Equifax regarding this? Also, I have an incorrect PO Box for an address and also an incorrect employer on my report. How can I get these off of my credit report? I have no credit card debt, no vehicle payments - I do have a mortgage. I have been current on all my payments. Any idea why my FICO scores are in the low and mid 700's? –Robbie

A. Hi Robbie – A delinquent account from Equifax? Equifax isn’t a lender/creditor so you can’t really have a delinquent account with them. My guess is that you have a delinquent account ON your Equifax credit report. You can contact Equifax a variety of ways to address all of your issues. Here is their contact information:

Via the web:
www.equifax.com

Via mail:
Equifax Credit Information Services, Inc
P.O Box 740241
Atlanta, GA 30374

Via phone:
1.800.685.1111

I’d also suggest contacting the other two credit reporting agencies as well. You can find their contact information at their respective websites:

Experian – www.experian.com

TransUnion – www.transunion.com

Regarding your FICO scores being lower than you expected, without seeing your credit reports I’m speculating but that delinquency certainly isn’t helping your scores. -J.U.

Q. My wife and I have a credit card debt of over 25,000 dollars. The interest rate has jumped to 20% (or more). We own our home.

Should we take out a home equity loan? Is there a quicker way to get rid of this interest rate and debt? Thanks –John

A. There are different schools of thought on that one, John. Some people would suggest opening a home equity line of credit (aka HELOC) or taking a home equity loan to pay off that credit card debt. Some people would strongly advise against it because if you miss your payments they can come take your house. If you stop making credit card payments they can’t come repossess dinners, vacations, clothes and whatever else you charged to get into $25K of debt.

I’d suggest trying something else first. Go to www.nfcc.org and find a local credit counselor in your area. Meet with them, it’s free. Ask them if you are a good candidate for a debt management plan (aka DMP). They may very well be able to renegotiate your interest rates and get your payments manageable so that you can handle them on your own with your current income. That saves your credit, keeps your house off limits, and gets you out of credit card debt.

PLEASE be sure to stick with a legit member of the National Foundation for Credit Counseling. Don’t just Google the term “CCCS”, because you will find some of the seedy players in the credit counseling world who snap up a lot of the “sponsored links” from the search engines. If they aren’t an NFCC Member Agency or clearly branded as Consumer Credit Counseling Service, then move on my friend. If you are unsure then send me the name of the company you’re looking at using and I’ll let you know if they’re part of the NFCC.