subject: Credit Debt Settlement Options - How A Debt Settlement Filing Will Affect Credit Score [print this page] Credit Debt Settlement Options - How A Debt Settlement Filing Will Affect Credit Score
Are you looking for credit debt settlement options? If so, you are taking a wise decision. However, there is a very important thing that you need to know. There is a notion that the method of settlement keeps the credit score unharmed. This is not true! The method of settlement affects the FICO score of the consumers. However, once the method is complete and the settlement is done and the creditor is paid off, the credit score is restored. This is what people miss out! They do not speak about what happens during the course of settlement.
When settlement process starts, the consumers are required to go delinquent. When the consumers stop paying, they become defaulters. This default is reported to the credit bureaus by the creditors. As soon as the credit bureaus get the default report, the FICO score of the consumers take the hit. The credit score falls. This keeps happening for as long as the settlement process continues. Every month, the consumers keep defaulting and every month, their credit score goes down.
When the negotiators earn a settlement deals for the consumers and the consumers pay off the remaining amount of the money to the creditors, the creditors give them a clean cheat and at the same time, the creditors inform the credit bureaus that the consumers have settled their dues and that the creditors consider those settlements as the dues paid in full. When the creditors provide this information to the credit bureaus, the credit bureaus take off the consumers from the list of the defaulters and the FICO score is revived to the original level. This is how debt settlement filing will effect the credit score of the consumers.
Debt settlement can make financial sense for consumers and small businesses that are experiencing a financial hardship and have at least $10k in unsecured debt. It is not the only option however. Check out the following link to speak with a debt relief specialist that can go over all your options for free.
