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How Does Debt Settlement Affect My Credit?

It can often be pretty hard to make large financial purchases in today's world if you have a poor credit rating. Some people who are in debt often try to get out of it by using the method of debt settlement. This is basically an aggressive way of eliminating or reducing the debt as quickly as possible. It's a common tactic for people who are facing serious problems or bankruptcy. However, many people ask the question, "How does debt settlement affect my credit?" (Another common term for debt settlement is credit card settlement.)

Debt settlement is typically arranged and negotiated by a third party who acts on behalf of the person who's in debt. However, you can handle it yourself if you wish. Either way, the object of the process is to try and settle the debt with the creditor agreeing to take less money than is actually owed to them.

During the negotiations of settlement, the person who owes money will receive notification from the creditor which states that the outstanding debt has been fulfilled. This means the creditor will then report the former debt as being paid or settled for less than full balance.

The settlement process often works with people are facing bankruptcy because the creditors know this may be their last chance to get some of their money back. They know that any amount of repayment is better than nothing at all.If you're thinking about going the debt settlement route, it's a good bet that you have a pretty poor credit rating.

You probably owe a lot more money than you make and you may have already missed some payments entirely or have been late with them. If so, this will have lowered your credit. However, you never know until you actually check what your credit score is, so it's a good idea to get an official copy of it.

However, even after paying back some of the money you owe, your credit rating may not improve all that much right away, but it shouldn't get much worse either even if it drops by 20 to 50 points. But your payments will now all be taken care of and the rating should improve as you won't owe any more money and that means you can't miss payments and be late with them.

Once your balances are back to zero, you shouldn't have any negative impact on credit score. This will allow your rating to improve over a short period of time. So to answer the question, "How does debt settlement affect my credit?" Well, it might have a negative impact for a short period of time, but it won't hurt your credit rating permanently.

If you don't settle your debt, you will definitely have to live with a worse credit rating for a longer period of time. Debt settlement can be an ideal way for some people to take care of money they owe and it can also help to relieve the stress that usually goes along with it. This could be both a physical and a mental benefit to people who are in debt. Your best option would be to locate a reputable debt settlement company to help settle your debts and alleviate your stress.

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Aaron T. Landreth

Aaron T. Landreth

Hello! My name is Aaron. I am the Co-Founder of LegalCreditCardSettlement.com. It is my job to make certain that the information you find on this website is of value, compliant with all FTC regulations and to help educate you about the process of debt settlement versus other debt relief options. Please contact us with any questions or concerns you may have.

Website: www.LegalCreditCardSettlement.com E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
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