How long does it take for a settled debt stay on credit report?

Date Posted: August 19, 2022
By: Maggie Marques

So how long does it take for a settled debt to stay on the credit report? Seven years. Yes, after your debt gets resolved, you will see it on your credit report for seven years from when it became delinquent. This is one of the reasons why financial experts can’t stress enough that we should know how to manage our finances.

Credit reports give financial institutions like banks, lenders, and mortgage providers a glimpse of how you handle your financial affairs. Even if you have paid off your debt, it will not automatically be reflected on your report, especially regarding debt settlement.

Debt settlement, what is it?

Let’s say you owe somebody $50,000. After many negotiations, the lender allowed you to pay him $40,000, and your debt was cleared or settled. Between you and your lender, you don’t owe him anything anymore, but when it comes to your credit report, it will still show.

Are you worried about debt settlement?

Your debt settlement history may stay in your credit report for seven years, but it will not be as damaging as not paying your debts. Believe it or not, lenders would want to talk with you and help you if you can’t fulfill your obligations anymore. They would rather have a big part of their money back if they didn’t get it in full. So before you talk to third parties for debt settlement help, please speak to your lenders first and ask them for repayment opportunities without hurting your credit history.

While it is true that there are debt settlement companies who will tell you to be delinquent so that they can negotiate a settlement with you, it is always prudent to weigh your options. Choosing the “lesser evil” may be the best way to go – debt settlement or bankruptcy? Keep your eyes on the debt-free goal and take the necessary steps, however hard they may be.

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