Because settlement is not a magic solution and it happens in real life, it will definitely have an impact on your credit score. This should come at no surprise to people who have been around the financial world for a while. Every single little thing that you do can come back to haunt you on the credit report. The more comforting side of this is that every good thing you do will also show up on the credit report and it will contribute to a good credit score. Settlement is one of those things that many people don’t understand completely, so they often offer opinions on it that are simply erroneous. 

Settlement does bring your score down some

Know that going into the process, settlement will bring your credit score down initially. When it is reported that you have settled, this will not escape the view of the credit reporting agencies. But how much of an impact will it have? That is the more important question and it is what people are asking more and more. Settlement will not have a huge effect because it also brings about some positive changes on your report that will counter the negatives. These changes have to do with total debt amounts and the ratios of available credit to credit used.

When you make settlement your chosen path, things even out to a point, because settling knocks off a monster amount from your credit report. Some people use the process to get rid of $10,000 or more in debt, so you can see how that might be a positive for your score. The creditors who use your report to gauge their risk will much prefer a person who has less debt, but has that little smudge on their credit report, over someone who still owes tens of thousands of dollars all over the place.

Credit card debt settlement provides a measure of finality, as well. It is something that will bring you to the point where you are able to move on and start all over. Starting new might seem like a good thing to so many people who have run into bad luck in their financial life. With no more collection calls and only good decisions in the future, rebuilding your credit score and starting out on a new path is a reasonable expectation. This will bring good tidings and top notch scores, as well.

Penny H asked:


My family and I had an unplaned birth, and our now overwhelmed with medical expenses and the new expenses from the child. Since we did not have health insurance we became overwhelmed with bills. Over the last couple of years we have fallen progressively farther behind on our credit card bills. We have not made a payment on some of the cards in over nine month. Utlimately, besides lowering our credit score, is the consequences of not paying the cards. Can the creditors take our vehicles? Take money from our bank accounts? Garrnish our wages? We are very worried about our debt and would like to pay the debt off, yet feel very intimidated by the whole process. Thanks for any help

Reed

Hector Milla asked:




Most people see their credit report as being some sort of evil necessity. Instead of helping them, it is a force devised specifically to hurt their chances of getting a loan or any sort of further financing. Though this is a fair statement for many, it does not have to be that way. There are some ways to get out of debt that don’t hurt your credit all that much. One thing that will almost destroy your credit is to stay in debt too long. If you are maxing out cards and simply paying the minimum, then chances are quite good that you will wreck your credit. When getting out of debt, many people want to know just how debt settlement impacts their credit report.

Settlement is a bit of a hard nosed strategy for getting out of debt. While most people sit around and pray for good luck and pray that they will be able to make the payments this week, some folks take action. They settle their debts directly because it costs less to do so and it gets them free of the chains associated with bad consumer debt. These people might suffer a little blip on their credit report in the short term, but the long term benefits make it a good investment.

In the short term, the effect on your credit report is that it will be noted there for all to see. Future creditors will see that you have settled for less than the total amount owed and your credit score will drop a little bit. Still, your credit score will be coming up as a result of having less debt and you will save yourself the harmful effects of missing payments and making payments late. As soon as you settle your debts, you will be working to separate yourself from the ugly aspects of your credit report. Every day that passes will be one more between you and your past.

Ultimately, settling your debts can have a positive effect on your credit score. It is a much better plan than wallowing in the minimum payment madness that can take over your life. At least with settlement, you will be free of the worry that typically goes along with collection calls and things of that ilk. Taking action now has worked for many people and if you are sharp, it can work for you, too.

Marcus

DebtSettlement911 asked:

GetOutOfDebtInAYear.com teaches you how to avoid becoming a slave to your credit score again after overcoming your traumatic financial event through credit card “Debt Settlement.” If you are considering Bankruptcy or Debt Consolidation, you should learn about the credit card Debt Settlement option.

Fred

charlotte q asked:


I have no credit card debt and an an excellent credit report. I am going to do a small remodel on my rental property and plan to use my Home Depot card with no interest no payment for 12 months. I plan to use a few other cards as well. I thought that 30% is the best to load on to each card to maintain my credit score. Am I correct?

Danny

lukeisback asked:

www.lukeford.net credit score, credit counseling, debt counseling, consolidate debt, credit application, credit report, debt management

Edgar

Adam Tijerina asked:




Everyone’s debt situation is unique and determining what will work best for you begins with categorizing your debt. Whether your debt is secured or unsecured significantly effects the measures you can take to eliminate debt.

Secured debt is a loan which is “secured” by property. Simply put, if the bank can come and take something from you if you don’t pay (ie; home, car) then the debt is secured.

Unsecured debt is the most common type of debt and is typically in the form of credit card debt.

Eliminating Unsecured Debt

The three most common ways to eliminate unsecured debt are

1. paying as agreed

2. bankruptcy

3. reaching a settlement with the creditor for less than the balance due – also known as debt settlement or debt negotiation

Bankruptcy is rarely a viable option. Due to the changes to the Bankruptcy Law in 2004 by the Bush administration, estimates are that less than 10% of people who file for bankruptcy are successfully discharging any debt. Most have to pay it back now under Chapter 13.

Credit Counseling and Debt Consolidation services typically focus on eliminating your debt by settling with your creditor for less than the balance due. These services are typically owned by large banks and credit companies and typically charge a fee. The good news is, this is something you can do on your own.

Settle For Less than the Balance Due

The key to a successful settlement is leverage. If a bank thinks they can get more out of you, they will not settle. This means that you may have to go months without making any payments. This will reflect poorly on your credit report and affect your credit score, but it is a necessary to obtain a good settlement.

During the time you are not making payments to the credit card company they will constantly attempt to contact you to discuss it. This is best dealt with from the very beginning by sending them a letter requesting that they only contact you in writing. Also, it is very important that you familiarize yourself with your rights under the Fair Debt Collections Practices Act and the Fair Credit Reporting Act. Collections representatives often behave in unscrupulous ways and knowing your rights is your key to fighting back.

Once you have sufficient leverage against the company it is time to attempt a settlement. A realistic goal would be to settle the debt for between 35%-50% of the balance. Contact the bank or credit card company directly and they will likely transfer you to their collections department. Once in touch with the collections representative simply let them know you wish to resolve the debt. Typically, they will make you an offer to settle for 65%-80% of the balance before you ever make an offer to pay. Let them know what you do have; an initial offer of 15%-25% of the balance is reasonable. They may tell you no or tell you that they have to speak with their manager but continue the negotiation as necessary to settle within the range that you desire.

Some credit companies are more apt to settle than others. For instance, American Express can be a very difficult company to settle with for less than 60%. Search the internet for information on your particular bank or credit card company to see how others have fared.

Allen

Jaytence asked:

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Phyllis

Marie Megge asked:




If you’re buried deep in credit card debt, you probably shouldn’t be asking if debt settlement affects your credit score. Instead, you may want to consider if you should really care what your score is. Think about your situation very seriously for a moment. You’re losing sleep and can barely make the minimum payments due on your credit cards. This situation is making you nervous and you can’t shake the sick feeling in the pit of your stomach because you’re always thinking about the money you owe and how you’ll be able to pay it back. Should you be worried? Probably, because this is a legitimate concern, and one that has the potential to remain for several years if you continue making minimum payments.

Now, jump over to the other side for a moment. Let’s say you’ve struggled and sacrificed to make your credit card payments each and every month. Because of this, your credit score is relatively high. So what? Is it worth feeling stressed out just to have a good credit rating? If you should enter a debt settlement program and your credit score is lower than you’d like it to be for a year or two, would you be awake at night thinking about your credit rating? It’s doubtful. If you’re like most people you’ll probably be so relieved to be debt-free, your credit score will be about as significant as your neighbor’s sister’s dog’s puppies.

Entering into a debt settlement program may or may not affect your credit score, depending on what your current situation is. Chances are, if you’ve made some late payments already and/or your credit cards are carrying high balances, your score is probably not as high as you may think it is. Negotiating reduced settlements with your creditors, through debt settlement, however, can save you thousands of dollars, help you avoid bankruptcy and finally get you to the point of being debt-free and stress-free in less than two years – very possibly even sooner.

If you should decide that debt settlement is your best option, be sure to hire a company you trust. If the first representative with whom you speak sounds like a salesperson and not really interested in your concerns regarding your current financial situation, there’s a good chance you’re not going to get the customer service you desire and deserve once you become a client with this particular firm. While going through the process of debt settlement, you’ll want assurance that your questions and/or concerns will be addressed promptly by the company you’ve chosen.

In summary, you should probably take a good look at what matters most to you – a lifestyle free of debt and concern, or a high credit score. When it comes right down to it, the choice really is yours, so be sure to make the decision you’re most comfortable with.

Kyan

Hector Milla asked:




Credit cards have your mind in a scramble? Not sure what bill to pay next, when this ones due or that ones due, or how much you even owe anymore? If your credit card bills have gotten a little out of hand, don’t worry. A consolidation loan to combine your cards might be all you need.

Credit card debt is something that many find it hard not to accumulate. All of a sudden you have three charge cards and you’re looking to get approved for another. It is not as rare an occurrence as you may think for someone to have double-digit numbers of charge cards. Whether you have two, three, or twenty cards, wouldn’t it be easier just to make one monthly payment?

A consolidation loan to payoff your credit cards can help you get your finances back in line and supply the peace of mind of knowing your bills are paid in full. No longer will you have to mail out multiple bills to a number of different creditors. Your lone payment will be to your debt consolidation loan company.

When your finances fall out of line, many times your credit tends to fall out of line with it. A loan to consolidate credit cards can help surrender your falling credit score as well. Making payments on the new loan will re-establish your credit, and the fact that your charge cards have been paid off will also help your credit score.

These cards can be a great thing for filling your life up with things you want, but you also have to realize these things have to be paid for as well. Sometimes the plastic has a strange way of fooling people that their not really spending money. It’s only when the reality of all the monthly payments hits and their credit starts taking a nose dive that many people realize things may have gotten out of line.

To get your finances back in line and help bring back some sanity to your spending, a consolidation of your cards can be just what you need. Not only will you not have creditors constantly calling your home, but you will spend less money each month. Interest rates and payments on these types of loans are generally very low, meaning more money in your pocket and less time paying credit cards. Combining all of your cards into one seems like something many more people should consider.

Joan