In case you have several debts, which you cannot take care of, then Credit Settlement is one option you should look for. You will, at least know how large this is to understand how it’ll influence your credit rating before making a decision.

At Global Debt Advisory, we walk our clients through navigating their debt solution and enable them to know how the credit settlement process works.

Here’s a bit of how credit settlement can affect your credit score and what you might want to think about before this avenue.

What is Credit Settlement?

Credit settlement is what a debtor negotiates with a creditor. This negotiation allows the debtor to pay some or all the debt for an amount less than what is owed. This usually happens when one is not in a good position to pay the aforementioned amount. This way and manner works both ways. It relieves you by slashing the debt but impacts your credit score.

Immediate Impact on Your Credit Score

Negative Mark on Your Credit Report

Whenever you pay a debt, creditors often characterize the settlement as “Paid Settled” or “Settled for Less Than Full Balance” on your credit report. This notation will be included in your credit report for as long as 7 years, significantly lowering your credit score.

Potential for a Significant Drop in Score

While the precise effect will depend on your credit history in general, paying off a loan will significantly impair what may otherwise be a good credit score. The more you owe on a loan, your payment history, and your overall credit usage, the more this will hit you. For customers who already have poor credit, conversely, the decrease might not be as dramatic, as the settlement could represent for them a chance at redemption.

Long-Term Effects of Credit Settlement

Recovery is Possible with Time and Positive Habits

Credit settlement will always damage your score in the short term, but it is definitely capable of recovery in the long term.

As long as you keep on maintaining a healthy credit usage pattern of payments being made regularly and in time, reduction of balances on credit cards, and completely avoiding the onset of new debt, then your score is going to rise gradually.

Increased Access to Credit After Settlement

After a debt has been settled, you should actually feel motivated to start accessing credit again. After all, it’s one thing to be able to settle one’s debts, but another to know when to utilize the available finances.

So having long-term credit access post credit settlement combined with good financial behavior can be highly beneficial to your credit report.

Is Credit Settlement Right for You?

Any choice is accompanied by pros and cons, as well as credit settlement. Global Debt Advisory provides you with expert advice so that it achieves the appropriate solutions tailored towards meeting your personal needs.

Paying for something may solve short-term problems but ultimately brings long-term devastation in that it will affect your credit score as well as the health of your personal finances.

Seeking Credit Settlement? Look no further than Global Debt Advisory for professional advice on debt management solutions that might just be the perfect fit for you. Let’s get in charge of your financial future.