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Credit score AND Debt SettlementNo doubt all customers worry about the credit score after and during the debt settlement program. The truth is in most cases, debt settlement or negotiation will have an adverse effect on both your credit score and your credit report. But in any case it's better than the extent with which your credit score is affected in case of bankruptcy. Depending on which chapter bankruptcy you file: Chapter 7 or Chapter 13, Bankruptcy will be reported on your credit for as much as 10 years in case of Chapter 7, and Chapter 13 Bankruptcy is allowed to be reported for 7 years.So let's see what happens if you are involved in debt settlement program. When a consumer is enrolled in a settlement program, the debt is reported as being past due until it is negotiated and settled. Once the account is settled it will be recorded as a satisfied debt that was "settled", "settled in full", "settled for less than the full balance", or in rare cases, "paid in full." "Paid in full" can be listed when paying a past due account could have more adverse consequences on your credit than positive ones and/or when the debtor has no incentive to pay the debt other than a moral one. It is impossible to say exactly what will happen to your FICO score because it depends on so many variables. For example what is your credit score now? If it is high, debt negotiation could cause a precipitous decrease. While if you credit rating is already low from collection accounts or charge offs, the decline will be far less severe. Rebuilding you credit afterwards also depends on your circumstances and commitment. Among the main factors are: 1) the length of your credit history; 2) your behavior after the settlement program; 3) what steps you will take to rebuild your credit; 4) what accounts are still need to be settled, and the other factors that will depend on your situation. The fastest way to rebuild you credit score to show payment history for a very long time, except for the short period of time when you were enrolled in a debt negotiation program, and reasonable financial management after the program. Fortunately, Debt Settlement consultants can provide you with credit repair plan and you will find out how to improve your own credit nearest time. |
