Will Debt Settlement Affect My Credit Score? If Yes, How Long?
Debt settlement is a process where an individual who has too much excess debt attempts to negotiate with their creditors with the hopes of reducing an outstanding balance, lowering interest rates, or consolidating debt.
If an affordable settlement can be achieved it is often preferred by the creditors because it will mean they will at least recoup a portion of the outstanding debt as opposed to bankruptcy where they most likely wouldn't receive anything. The debtor also should prefer an affordable settlement because it won't nearly tarnish their credit history as badly as declaring bankruptcy would. While it won't be as significant as declaring bankruptcy, settling debt will at least temporarily negatively impact their credit score.
Hector Milla Editor of the "Best Debt Settlement Services" website -- http://www.BestDebtSettlementServices.com -- pointed out;
"…In almost all situations, debt settlement will at least temporarily affect the debtor's credit score, although the amount of time it take before the score is repaired varies significantly by each situation. The first way settling debt negatively impacts a debtors credit score is that the debtor is in actuality breaking the original agreement that was put in place with the creditor. When a debt is paid off on time and in full, the debtors credit report will consider the account "paid as agreed." When an account is settled, the credit report will consider the account "paid," which is better than defaulting but still a black eye on a credit report. It can take a few years before the debtor's credit report recovers from these negative marks…"
The next way settling debt negatively impacts credit is that while the debtor is paying a debt settlement company, the creditors are not being paid and the credit report will reflect late payments for all the months they are not being paid. Since having a history of making timely payments is one of the largest factors in credit scores, this can negatively impact the debtor's credit score for a few years. The debtor can avoid these negative marks by making minimum payments prior to settling.
"…Overall, the debtor should expect for their credit report and score to be damaged for at least 2-3 years before it begins to recover. The 2-3 year repair period is much less than declaring bankruptcy which will negatively impact credit for at least 10 years before the score begins to repair. Some debtors who go through a settlement process have reported being approved for new credit accounts within a year of settling…" H. Milla added.
Further Information By Visiting; http://www.BestDebtSettlementServices.com
If an affordable settlement can be achieved it is often preferred by the creditors because it will mean they will at least recoup a portion of the outstanding debt as opposed to bankruptcy where they most likely wouldn't receive anything. The debtor also should prefer an affordable settlement because it won't nearly tarnish their credit history as badly as declaring bankruptcy would. While it won't be as significant as declaring bankruptcy, settling debt will at least temporarily negatively impact their credit score.
Hector Milla Editor of the "Best Debt Settlement Services" website -- http://www.BestDebtSettlementServices.com -- pointed out;
"…In almost all situations, debt settlement will at least temporarily affect the debtor's credit score, although the amount of time it take before the score is repaired varies significantly by each situation. The first way settling debt negatively impacts a debtors credit score is that the debtor is in actuality breaking the original agreement that was put in place with the creditor. When a debt is paid off on time and in full, the debtors credit report will consider the account "paid as agreed." When an account is settled, the credit report will consider the account "paid," which is better than defaulting but still a black eye on a credit report. It can take a few years before the debtor's credit report recovers from these negative marks…"
The next way settling debt negatively impacts credit is that while the debtor is paying a debt settlement company, the creditors are not being paid and the credit report will reflect late payments for all the months they are not being paid. Since having a history of making timely payments is one of the largest factors in credit scores, this can negatively impact the debtor's credit score for a few years. The debtor can avoid these negative marks by making minimum payments prior to settling.
"…Overall, the debtor should expect for their credit report and score to be damaged for at least 2-3 years before it begins to recover. The 2-3 year repair period is much less than declaring bankruptcy which will negatively impact credit for at least 10 years before the score begins to repair. Some debtors who go through a settlement process have reported being approved for new credit accounts within a year of settling…" H. Milla added.
Further Information By Visiting; http://www.BestDebtSettlementServices.com
Source...