Wondering what your debt settlement credit score should be if you plan to apply for settlement? How will a debt settlement affect your credit score? Is it the way to go? These may be questions running through your mind as you gauge your options regarding fulfilling your dreams of being debt free.

Debt settlement credit score – will this affect you?

Applying for a debt settlement will negatively impact your credit score. This is especially true if you have an enormous debt you will settle, the condition of your credit, how much you have paid versus the remaining balance of your debts, and a host of other conditions.

Admittedly, debt settlement credit score issues can negatively impact your financial standing. Still, it is one of the better options to take if you want to eliminate your current financial hardship.

Debt settlement tips

Financial experts suggest two of the best steps to settle your debts – the  “avalanche technique” or the “snowball effect.”

• The Avalanche approach – this technique encourages you to prioritize paying off the most significant amount with the highest interest rate. Once you are done with the most important debt, you move on to the following most considerable amount. This approach will help you save money on interest in the long run.
• The Snowball approach – this process encourages you to pay off the smallest debts. When you are done repaying, you increase the amount you are used to and start paying the next smallest debt creating a “snowball” effect. You continue adding and rolling until all your debts are settled. This also gives you the satisfaction of ticking off debt and a sense of accomplishment that you are indeed on your way to being debt-free.