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Yes, Credit Card Debt Settlement Will Affect Your Credit Score
Many people assume that credit card debt settlement won’t affect your credit score.
That would be nice if that were true. Debt settlement will affect your credit score. But there are other considerations to take, don’t let this fact keep you from settling your debt. Here is the truth about what happens to credit score with a settlement offer.
Initial Hit
Natalia Osorio Editor of the “Credit Card Debt Counseling” website — http://www.CreditCardDebtCounseling.biz — pointed out;
“…Chances are if you are seeking help to lower your debt ratio, your credit score has already taken a hit. When you start the process of settling a debt, you will be advised to open a savings account. Instead of making monthly payments to your creditor, you will start saving that money so you can send the creditor a lump sum payment. Even if the creditor agrees to these terms, the debt doesn’t disappear. Even if they offer to freeze the account for you, it will still be reported to the credit bureau’s each month. Every month that you miss a payment, your credit score will drop. Expect to see your credit score go down as you save the money to make the settlement offer…â€
Settled Accounts
Once you have the money to make a settlement offer, you may think you’re in the clear with your score. Unfortunately even a settled account can affect your credit. The debt will reflect on your credit report as paid- but settled. A settled debt reflects poorly on your report. However, it’s much more desirable to have an account reflected as paid than it is to have it reflected as charged off or opened and unpaid.
The Long Term
“…In the long run, debt settlement will do you more favors than harm. While your overall report will suffer in the beginning, the long term results are much more desirable. Once a settlement is reached, you are able to pay off the debtor and not have to worry about them anymore. Your financial situation will improve, and you can move on to the next debt. Your score will improve over time, and future creditors will see that you were able to pay the debt eventually. This looks so much better than just letting a debt go. Charged off accounts will stick around for up to 7 years, and will keep your score low. A settled account won’t have the same damaging affects. It will allow you to rebuild your credit worthiness, and allow you to avoid the same situations in the future…†N. Osorio added.
Further information about trusted and reputable companies for credit card debt settlement by visiting; http://www.CreditCardDebtCounseling.biz