How Does Debt Settlement Affect Your Credit Score?

Around 25 percent of clients who get out of debt do it in a year or less. The other 75 percent do it in a two- to three-year time frame. It takes time to build up funds.

Delinquency is proof of hardship. In the mortgage industry, some homeowners have been required to be 3-4 months delinquent on their mortgage, near foreclosure, before they could even be considered for a loan modification. The same goes for people who need debt relief.

With delinquency, your credit score will be low already and in the long run, approaching a debt settlement attorney will help you to start over, make one payment and raise your score in the future.

So, debt settlement might lower your credit score, which will already be low, at first but will help in the long run. Thus if you are really in hardship and need debt relief, your credit score is going to be hurting anyway.

Tips To Help Your Credit Score Through Debt Settlement

• Debt settlement attorneys will tell you they recommend people to keep one credit card so they can build their credit score back up by making regular payments. It usually takes six to 12 months before they can start rebuilding their score.
• Also, it is recommended to get things like cheap cell phones in your name to raise your score.

Settling Debt Is More Important Than Credit Score
It doesn’t matter what your credit score is if your ability to repay your debts is compromised by loss of income or a large amount of debt. Regardless of payment history, which is only 35 percent of your actual score, your credit score will fall if your unsecured debt balances are over 50 percent of your credit limit.

Each consumer has a different scoring card. Not all actions will have the same consequences from consumer to consumer. For example, if you had a spotty payment history in the past, they might be affected more by delinquency today, as opposed to someone who may have had a perfect history in the past, but may be experiencing difficulty for the first time.

This can be confusing, so a debt settlement attorney that knows all the facts is crucial to getting you out of debt and debt relief.

The key, not just a credit score, to debt relief in this economy is balance. You’ll need decent credit score, coupled with a good debt to income ratio. While the credit score is important, debt settlement through a debt settlement attorney is more important.

In fact, often unsecured debt is the key when investigating why someone’s credit score has dropped a lot. If your payment history is perfect or near perfect, yet your FICO score is struggling to stay above 660, you have a problem and need the help of a debt settlement attorney.

Without eliminating your unsecured debt through a debt settlement attorney, your credit score will surely continue to drop and you can be sure, it won’t be coming back up.

Also, if you have a good credit score and you have a good payment history and you still got denied for a line of credit, you need to take a serious look at debt settlement through an attorney.

Only a debt settlement attorney who starts the process for you can make sure you will be out of debt in a solid time frame and back on track within years.