Is Credit Card Debt Settlement Dangerous For Your Credit History?

Being a lawbreaker in monthly payments is a common demand most US banks have towards a person who pretends to get a debt settlement. It’s not a secret that missing regular payments may negatively affect your credit score. Generally, the longer you miss the payments, the more damage it causes to your credit history. However, if your manage to obtain a negotiated settlement from bank, it will inform the credit bureaus that your account has been paid or settled for less than your owed earlier. Of course, such measure will not bring your credit score as high as a “paid in full” status of your account. Thus, be ready to the fact that your credit score will be constantly rebounded, and remember that a settled account, even if it has been settled for less than you initially owed, worth more than an outstanding account.

Finally, if you choose a debt settlement, a good question to pose is not “will it downgrade my credit score?”, but “is the account settlement worth decreasing my credit score?”. For example, if the amount of your debt is large, and you know that settlement can save you thousands of dollars, than you can consider paying some extra points in interests on a new cash loan in order to settle your debt. But if you need a point on your credit report that states “paid”, don’t choose anything less. Trying to make them to delete the point when your debt is paid off is a good idea. You could send them message with a “pay for delete” subject using certified mail. If they accept it, make sure they confirm their decision in a written form.

Be aware that your credit scores are recorded depending on the history age. Thus, in order to recover your credit score for taking a loan, do not make any payments during 2 years inactive. If you do, this will have a negative impact on your credit score. But if you are interested in a long-term credit recovery, pay the due account off. At present, there are 3 leading credit organizations - Experian, Equifax and Transunion – that estimate your credit ranking based on the information they receive from your creditors. Each of these organizations has its own scoring principles. However, the FICO method of credit score estimation rests the main one. The acronym means Fair, Isaac and Company (the company that introduced the method). Here is how they estimate a credit score:
10% - new credits
10% - types of credit used
15% - credit history period
30% - total amount owed
35% - payments’ history

In general, obtaining a credit report is rather easy, whereas getting a high credit ranking may be troublesome. When paying a credit company for sending you your credit score report, make sure it also sends you the credit score and you know the number that your lenders will get. Some credit companies tend to charge extra money for showing you the score. Credit.com is where you can get your credit score report for absolutely free. But don’t forget to delete your membership within the following 30 days.