| It's not uncommon for someone to have racked up | | | | Debt settlement affects your credit score in the |
| thousands of dollars in consumer debt. What are rare | | | | category of your payment history. The other two |
| are the stories of that bill being cut in half through debt | | | | categories making up your credit mix which determine |
| settlement. While the actual saved percentage may | | | | your FICO score are the ratios of debt-to-income and |
| vary depending on circumstance, this kind of thing does | | | | debt-to-credit limit. Take a look at how you're doing in |
| happen in the real world - but not penalty-free. | | | | each of these areas to determine which categories |
| First let's take a look at why someone would want to | | | | you are strong in verses which are already weak. |
| settle their debts. Usually it is because they are simply | | | | After a debt settlement, your credit score will definitely |
| unable to pay them anymore or keep up with the | | | | take a dive for the worse if you have had a perfect |
| growing interest. Misunderstandings or dislike of the | | | | payment history up to that point. If you have already |
| goods or services received may also be a reason for | | | | had a late payment, however, there would be much |
| debt settlement. | | | | less damage. Later blows hold less of an impact on |
| Whatever the causes, the debtor is unable or unwilling | | | | your credit report than the first one. |
| to pay the full amount and desires to negotiate with | | | | Knowing that your credit score will be lowered after |
| the creditor for a lower rate. The creditor likewise | | | | debt settlement, remember to take into account the |
| wants to negotiate some kind of payment, as any | | | | other consequences of debt settlement. Determine |
| money is better than nothing. In a debt settlement, both | | | | your values. For example, is it more important for you |
| parties negotiate - the debtor trying to bring the price | | | | to have emotional and physical relief by carrying less |
| down, and the creditor trying to squeeze as much out | | | | debt and stress than to boast a higher credit score? |
| as possible without losing the payment. | | | | With all the financial benefits, as well, it's no wonder |
| It's great to have your debt settled and taken care of | | | | that many choose debt settlement as an option. While |
| on a level that you can handle. Emotionally and | | | | it may hit your credit report now, all the positive |
| financially the benefits are enormous. What most | | | | aftermath usually outweighs the initial negativity. After |
| people don't know, though, is that while an "unpaid" | | | | any debt settlement, make sure you take the |
| collection has a negative effect on your credit report, | | | | necessary measures to boost your credit through |
| so does a "paid" one. | | | | credit repair. |