Will debt settlement affect my credit score (FICO)?
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Yes. More often than not, being in debt, your credit accounts already have, or are, in the process of being reported negatively to the major credit reporting agencies. Depending on how long you have been delinquent in payments, negotiating and settling these debts for good will have an overall positive effect on your credit score. Settled accounts and or zero balances are seen as “positive” when compared to unresolved debts or a bankruptcy. This is even more important when you are attempting to purchase or refinance a home. If you have charge offs or collection accounts being reported, it is best to approach settlements prior to applying for a loan.
Also, there are times that settling a long over due account can have a net negative effect on your credit. When it comes to properly addressing your debt load while keeping an eye on your future credit goals and needs, working with a credit coach could mean the difference of thousands of dollars needlessly wasted as well as additional years separating you from achieving your goals.
Filed under: credit score
