Does settling debt hurt your credit? The short answer is it does. But not all settlements are created equal. Some debt settlement companies promise to pay your debt for a small fraction of the debt you owe but be wary because they may charge you exorbitant fees and might not deliver their over-the-top promises. To ensure you don’t fall prey to schemes like this, understand all the terms and fees involved and do your research well.
If you are having a hard time with your debt, there are other possible ways that you can avail of without creating too much of a negative impact on your credit score. Here are the options available for you:
A debt management plan or DMP will help you repay your creditors over time by helping you develop a structured repayment plan. Here are some of its advantages:
Debt consolidation has similar benefits to the debt management plan. One of the outstanding benefits of consolidation is that you will have a lower credit utilization rate. This means that you will have an improvement in your credit score.
So if you are struggling with debt, there are other options you can explore. Yes, debt settlement with hurt your credit score but in time, you will bounce back if you keep paying your bills on time and fulfilling your other obligations.
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