Damage to your credit score is a widely reported negative consequence of debt settlement.
If you're considering debt settlement, you have to know that you will suffer damage to your score, especially if your accounts are current and all paid on time when you decide you're going through debt settlement.
Your score will suffer whether you settle on your own or if you go through a settlement firm.
Why Does Your Credit Score Drop? Credit score damage is inevitable with debt settlement.
That's because your accounts have to be delinquent before creditors will entertain a debt settlement offer.
If your accounts are already behind, then your credit has probably already suffered the hit that comes after you stop paying your accounts.
But, if all your payments have been on time so far, your score could drop hundreds of points.
Not only do the late payments hurt your score, the debt settlement itself will also have an impact on your score.
Once you've settled your debts, your credit report will show that you didn't pay your account as originally agreed and your credit score will reflect that.
Would You Rather...
If you're at the point that you're considering debt settlement, you probably have so much debt that you can barely handle it all.
So you have a choice: you could have a great credit score, but juggle all your debt payments or you can use debt settlement to become debt-free, but live with a bad credit score for a few years.
The real benefit of a great credit score is to be able to borrow money, but lenders may not lend to you, even with a great credit score, if you have too much debt.
If you choose to struggle through your debt, you could end up damaging your score anyway.
What if your minimum payments suddenly increase and you can't afford to pay your payments anymore? Or what if you get another expense that requires you to put your credit card debt on the back burner? If your tight budget causes you to miss credit card payments, your credit score will fall.
On the other hand, you could make a conscious decision to sacrifice your score to get rid of your debt.
Letting your score go down the drain means you probably won't be able to borrow money in the near future.
But, what's the likelihood that you'd be getting a new credit card or loan considering the debt you're already dealing with.
A bad score would also require you to pay security deposits on new services like electricity, cell phone, or water.
A Bad Credit Score Isn't Forever Without debt settlement, it could take decades to pay off your debt, especially if you can only afford to make the minimum payment on your balances.
It will take even longer if you continue adding debt on top of what you're trying to repay.
A debt settlement, and the accompanying late payments, will only stay on your credit report for seven years.
If you take the right steps, you can improve your score long before that time.
If you're considering debt settlement, you have to know that you will suffer damage to your score, especially if your accounts are current and all paid on time when you decide you're going through debt settlement.
Your score will suffer whether you settle on your own or if you go through a settlement firm.
Why Does Your Credit Score Drop? Credit score damage is inevitable with debt settlement.
That's because your accounts have to be delinquent before creditors will entertain a debt settlement offer.
If your accounts are already behind, then your credit has probably already suffered the hit that comes after you stop paying your accounts.
But, if all your payments have been on time so far, your score could drop hundreds of points.
Not only do the late payments hurt your score, the debt settlement itself will also have an impact on your score.
Once you've settled your debts, your credit report will show that you didn't pay your account as originally agreed and your credit score will reflect that.
Would You Rather...
If you're at the point that you're considering debt settlement, you probably have so much debt that you can barely handle it all.
So you have a choice: you could have a great credit score, but juggle all your debt payments or you can use debt settlement to become debt-free, but live with a bad credit score for a few years.
The real benefit of a great credit score is to be able to borrow money, but lenders may not lend to you, even with a great credit score, if you have too much debt.
If you choose to struggle through your debt, you could end up damaging your score anyway.
What if your minimum payments suddenly increase and you can't afford to pay your payments anymore? Or what if you get another expense that requires you to put your credit card debt on the back burner? If your tight budget causes you to miss credit card payments, your credit score will fall.
On the other hand, you could make a conscious decision to sacrifice your score to get rid of your debt.
Letting your score go down the drain means you probably won't be able to borrow money in the near future.
But, what's the likelihood that you'd be getting a new credit card or loan considering the debt you're already dealing with.
A bad score would also require you to pay security deposits on new services like electricity, cell phone, or water.
A Bad Credit Score Isn't Forever Without debt settlement, it could take decades to pay off your debt, especially if you can only afford to make the minimum payment on your balances.
It will take even longer if you continue adding debt on top of what you're trying to repay.
A debt settlement, and the accompanying late payments, will only stay on your credit report for seven years.
If you take the right steps, you can improve your score long before that time.
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