Debt Settlement Relief – How Does Debt Settlement Effect My Credit History?

One should always keep some things in mind while trying out various options to reduce your debt

. There is no technique that does not affect your credit score, no matter how you pay back your debt, it will reflect in your credit report. Debt settlement works well for most of the people having large unsecured debts. However it's a common misconception that debt settlement has no negative effect on the credit score.

As a matter of fact, any technique, any program which does not constitute paying your creditors full credit payment will have an adverse effect on your credit score. Debt settlement is a process where a third party advisor will negotiate your debt on behalf of the debtor and the end result would be the reduction in the outstanding balance and the debtor have to pay less than what he actually owes. During the settlement process, the creditor will send you a written statement mentioning that your debt has been "paid", "settled" or "settled for less than full payment". Creditors normally agree to forgo the last statement as they also know that if you go bankrupt, they will have nothing. Realistically analyzing the situation, if you have reached up to a saturation point where you are considering a debt settlement option, then your credit score is already suffering badly. The truth is that Debt settlement will not make a tremendous negative effect on your credit rating but, on the other hand it will probably save you from becoming absolute delinquent and have credit damage for 7- 10 years.

Settlements will not permanently hurt your credit rating. In fact, you can easily recover your credit points within a couple of years which is far easier to regain than in the case of bankruptcy. It is better to have the score affected temporarily considering the fact that it will take you years to pay off the debt with minimum payments.

Debt Settlement Relief How Does Debt Settlement Effect My Credit History?

By: meena jha

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