Can Debt Settlement Help My Credit Score?

Debt settlement is an option that can not only help you not only pay off debt, but will also work to improve your credit score.

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Studies have shown that 1 out of 5 of us have errors on our credit reports!

In fact, the Federal Trade Commission released a study recently that also reveals that many consumers who attempted to dispute those errors with the major credit reporting bureaus were unsuccessful.

Your credit report and more importantly, your credit score. is a reflection of all of the information that is being reported.  

That is why is so very important that you not only know what is being reported, but also to know what to do about inaccurate information.

Of course, you want to make sure that your personal information is correct, such as:

  1. Your name with correct spelling
  2. Social Security Number
  3. Current address
  4. Date of Birth

After that, inaccuracies on accounts, balances, etc. are common.

For example....

Let's say you went through a tough time, financially a couple of years ago.  If you were not able to keep up with your minimum payments on your credit cards, then one or more may have been turned over to a collection agency.

But, when things changed, you replied to one of the debt collector's letters or calls and paid the account off.

The debt collector should have reported it to the credit bureaus, but many times they don't.

So, when you go to get a loan and are denied, the credit report (if denied, the lender must provide you with a copy of the credit report they used and explain why) showed that account with an outstanding balance!

Now you have to contact the credit bureau and open a DISPUTE.

Many people just don't know that there are mistakes and inaccurate information being reported on their credit report and therefore, they are paying the price...literally!

If you find errors on your credit report, click on the button below and you will see exactly what to do:

How to Dispute Errors  on Your Credit Report

 

Just a word about so-called "credit repair" companies...

While you should dispute any legitimate errors on your credit report, opening a frivolus dispute is not only dishonest, but also could get you into trouble!

Using a Credit Repair company to challenge or dispute legitimate errors is fine, beware of those types of companies who make outrageous claims, such as:

  • “Credit problems? No problem!”
  • “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”
  • “We can erase your bad credit — 100% guaranteed.”
  • “Create a new credit identity — legally.”

The Federal Trade Commission has a good article about this that you should check out:

"Credit Repair...How to Help Yourself"

But what about legitimate accounts that you forgot about or neglected to pay off?

If that account has been with a collection agency for more than a year or so, you should be able to negotiate a SETTLEMENT for less than the full balance.

Once the account has been settled, the debt collector should (there we go again!) report it to the credit bureaus as "settled-in-full" or "settled-as-agreed" and the balance should be $0.

Once you have taken care of old accounts via debt settlement, your credit report will start to improve as your debt-to-available credit ratio improves, and thus, you are a better credit risk.

Finally...

Yes, Debt Settlement is a great way to not only pay off old, outstanding accounts, but also a great way to improve your credit score!

FREE  Debt Elimination Summary

 

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Tags: Credit Score, debt settlement in oregon