Debt settlement and credit score realities and woes

Date Posted: December 3, 2022
By: Maggie Marques

You’ve made bad financial choices before and want to know about debt settlement and credit score work. Yes, when you apply for a settlement, it usually hurts your credit score. The gravity of the matter depends on how much you are applying to settle and your current credit condition, among many others. Let’s not sugarcoat the situation and deal with it, then find a solution to your debt problems. But the most important thing is to start it and bring your finances back to health.

Which debt should I settle?

Now you understand how debt settlement works and how to improve your credit score, you are still not out of the woods. A reality you need to understand is that creditors of current debt will usually be unwilling to settle. So, it would be better to consider resolving an older debt. This is also one of the reasons why debt settlement companies may tell you to stop paying your debt and wait for some time to apply for settlement.

Debt settlement and credit score realities

You may think that it would probably be better to apply for debt settlement from all your bad debts and settle multiple accounts at the same time, but it is not. It will hurt your score more than having only one debt settlement. Once you apply for a debt settlement, this will stay on your credit report for seven years.

In this case, it would be better to settle one account at a time and try to keep updated on your repayment with the others. The key here is to try to stay current with your other obligations.

Regarding your credit history, the most crucial factor is your current obligations’ payment history. So try to update your existing debts before considering applying for debt settlement.

Take the essential first step.

The bottom line is that you may think it is better to forget everything and pretend that nothing happened. But you can’t get away with it. Debt settlement may hurt your credit score, but it will only be temporary. The most important thing to remember is that you can still bring your finances back to health, but you need to do something about the issue of debt settlement and credit score, and you need to do it now.

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