Does Debt Settlement Affect My Credit? Yes and No
There is nothing that you can do in your financial life that will go unnoticed by your credit report.
Whether that means missing a payment, making a late payment, or opening up a new account, everything will get noted and it will all go into calculating your credit score.
With that being said, you need to know that your credit score is produced by a number of different factors.
Just one thing will not change it too much and you have to know how that one factor interacts with other factors.
Thus is the case with debt settlement.
It is one factor to consider, but not in a vacuum.
So will debt settlement hurt your credit score? As the title suggest, this is a yes and no type of answer.
On one hand, it will have some impact right away.
Settling your cards for less than the total balance is a sure way to ding the score a bit.
The creditors will report this and it will stay on your report for a number of years.
But what about the other factors? If we concede that credit is decided by the interaction of multiple factors, we have to know about some of the other items, too.
Consumers are getting smarter about this, and it's helping them tremendously.
When debt settlement occurs, consumers are ultimately taking dead aim at their debt.
They are knocking it our right then and there, which creates some nice credit benefits.
This closes down a number of open accounts, thus raising their credit score a bit.
The more important consideration is that settlement knocks out a large amount of used credit.
The amount of debt that you have is one of the most important, if not the single most important factors on your report.
By wiping out something like $10,000 worth of debt, you will be setting loose the anchor on your credit score.
You're opening up the possibilities, which is always nice.
So what is the final answer? In all, your credit score won't be damaged and every day that passes will make it a little bit better.
By settling, you are taking care of the debt now.
If you were to allow it to fester, you might not get out of debt for years, which would leave you with more long term debt consequences than you would want to deal with in a lifetime.
Whether that means missing a payment, making a late payment, or opening up a new account, everything will get noted and it will all go into calculating your credit score.
With that being said, you need to know that your credit score is produced by a number of different factors.
Just one thing will not change it too much and you have to know how that one factor interacts with other factors.
Thus is the case with debt settlement.
It is one factor to consider, but not in a vacuum.
So will debt settlement hurt your credit score? As the title suggest, this is a yes and no type of answer.
On one hand, it will have some impact right away.
Settling your cards for less than the total balance is a sure way to ding the score a bit.
The creditors will report this and it will stay on your report for a number of years.
But what about the other factors? If we concede that credit is decided by the interaction of multiple factors, we have to know about some of the other items, too.
Consumers are getting smarter about this, and it's helping them tremendously.
When debt settlement occurs, consumers are ultimately taking dead aim at their debt.
They are knocking it our right then and there, which creates some nice credit benefits.
This closes down a number of open accounts, thus raising their credit score a bit.
The more important consideration is that settlement knocks out a large amount of used credit.
The amount of debt that you have is one of the most important, if not the single most important factors on your report.
By wiping out something like $10,000 worth of debt, you will be setting loose the anchor on your credit score.
You're opening up the possibilities, which is always nice.
So what is the final answer? In all, your credit score won't be damaged and every day that passes will make it a little bit better.
By settling, you are taking care of the debt now.
If you were to allow it to fester, you might not get out of debt for years, which would leave you with more long term debt consequences than you would want to deal with in a lifetime.
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