Does debt settle hurt your credit? Yes it does! Debt settlement hurt your credit scores very badly. Do not forget to negotiate your credit rating after you settle debt. Don’t let credit rating negotiations deprive you of a great debt settlement offer. In many cases, “Settled” is the best you are going to get.
The effect of having “settled” on your credit report
Sometimes (but rarely) you can negotiate for an untarnished credit rating with a debt settlement, but this is getting increasingly tough to do. In most cases, when you settle with a creditor, your credit report will say “settled” next to the account for which the settlement took place. This has a negative affect on your credit score, meaning it will go down, and depending on your overall credit report, it could put a major hurt on credit report.
For the advanced and ultra-smooth negotiators
If you are the ultimate negotiator and you love a near impossible challenge, you can try to get a credit card company to give you a perfect rating. Here are some things to keep in mind. Some creditors will tell you that it is illegal to change a listing on your credit report. Hogwash. A creditor can agree to
change your listing based on a new contract (the one you will negotiate with them to settle your debts) and if you pay per this new contract, isn’t this “paying as agreed”? Absolutely. I would remind them of this point, by the way.
Creditors make their profits by collecting from their customers, not by reporting negative credit information. Because creditors recognize this, they will often agree to delete any negative listing upon settlement of the debt. You have to realize that creditors won't try to ruin your credit rating as a personal vendetta. It's strictly business. If it pays them to collect from you and restore your rating to perfect, they will do this. Talk to them in terms of money, not principals or morals. Something along the line of "I know you would love to receive the 3000 bucks I owe you, but it will not help my credit report if you can't change my rating to 'Paid as Agreed'. All I have is 3000 bucks and I will pay it to other creditors who will agree to change my credit rating in writing."
If you have to accept an imperfect credit listing as part of your settlement
You may find that some of your creditors are willing to hold out longer than you are before agreeing to delete the negative listing from your file. It may seem that they are unwilling to delete the negative listing under any circumstance. Once again, let it be said that sometimes creditors will eventually give you what you want if you speak to the right person, are patient and persistent, and make the right offer.
List the account as “Unrated”. Many times, a creditor will agree to list the account as “unrated”. What does this mean? It means just that, the account is not listed as good or bad. As far as we can tell at the time of this writing, an “unrated” notation for an account does not negative impact your score. However, if the listing is unrated, make sure that any lates on the account are removed, as these lates WILL have a negative affect, even if the account is unrated.
List the account as "Paid" only. You may counter-offer for the creditor to list the account as "Paid" rather than delete it altogether. This is a true indication of the status of the account and many creditors will concede and agree to this wording. A "Paid" status is still very negative for a collection account or an account that will show "Paid Charge off" or "Paid Repossession." You should insist that the account show "Paid" only and that all other negative notations (such as "Charge-off," "Repossession," late notations, or "Collection") are deleted at the same time. A simple "Paid" notation on a regular trade line is neutral and should not hurt your credit.
List the account as "Settled" or “Paid for less then owed” only. You may counter-offer that the creditor simply lists the account as "Settled" rather than delete it altogether. "Settled" is an inherently negative listing but not as negative as "Paid Charge-off." Don't agree to a "Settled" listing until you have exhausted all other possibilities. "Settled" will still trigger a credit denial. You should only agree that the account show "Settled" if all other negative notations (such as "Charge-off", "Repossession", late notations, and "Collection") are deleted at the same time. If you agree to a "Settled" notation, you must continue to work hard to delete the notation through the credit bureau dispute process.
List the account as "Paid Charge-off" or "Paid Collection" or "Paid was 30-, 60-, or 90- days late." If you wound up with this listing on your credit report, you made no attempt to deal with the credit card company. I’ve never heard of anyone not getting at least a “Settled” notation on their credit report.
******Usman ahmed owner of this blog created this post with his knowledge.All content provided on this blog is not copied from any other blog and site and is for informational purposes only and The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.
The effect of having “settled” on your credit report
Sometimes (but rarely) you can negotiate for an untarnished credit rating with a debt settlement, but this is getting increasingly tough to do. In most cases, when you settle with a creditor, your credit report will say “settled” next to the account for which the settlement took place. This has a negative affect on your credit score, meaning it will go down, and depending on your overall credit report, it could put a major hurt on credit report.
For the advanced and ultra-smooth negotiators
If you are the ultimate negotiator and you love a near impossible challenge, you can try to get a credit card company to give you a perfect rating. Here are some things to keep in mind. Some creditors will tell you that it is illegal to change a listing on your credit report. Hogwash. A creditor can agree to
change your listing based on a new contract (the one you will negotiate with them to settle your debts) and if you pay per this new contract, isn’t this “paying as agreed”? Absolutely. I would remind them of this point, by the way.
Creditors make their profits by collecting from their customers, not by reporting negative credit information. Because creditors recognize this, they will often agree to delete any negative listing upon settlement of the debt. You have to realize that creditors won't try to ruin your credit rating as a personal vendetta. It's strictly business. If it pays them to collect from you and restore your rating to perfect, they will do this. Talk to them in terms of money, not principals or morals. Something along the line of "I know you would love to receive the 3000 bucks I owe you, but it will not help my credit report if you can't change my rating to 'Paid as Agreed'. All I have is 3000 bucks and I will pay it to other creditors who will agree to change my credit rating in writing."
If you have to accept an imperfect credit listing as part of your settlement
You may find that some of your creditors are willing to hold out longer than you are before agreeing to delete the negative listing from your file. It may seem that they are unwilling to delete the negative listing under any circumstance. Once again, let it be said that sometimes creditors will eventually give you what you want if you speak to the right person, are patient and persistent, and make the right offer.
List the account as “Unrated”. Many times, a creditor will agree to list the account as “unrated”. What does this mean? It means just that, the account is not listed as good or bad. As far as we can tell at the time of this writing, an “unrated” notation for an account does not negative impact your score. However, if the listing is unrated, make sure that any lates on the account are removed, as these lates WILL have a negative affect, even if the account is unrated.
List the account as "Paid" only. You may counter-offer for the creditor to list the account as "Paid" rather than delete it altogether. This is a true indication of the status of the account and many creditors will concede and agree to this wording. A "Paid" status is still very negative for a collection account or an account that will show "Paid Charge off" or "Paid Repossession." You should insist that the account show "Paid" only and that all other negative notations (such as "Charge-off," "Repossession," late notations, or "Collection") are deleted at the same time. A simple "Paid" notation on a regular trade line is neutral and should not hurt your credit.
List the account as "Settled" or “Paid for less then owed” only. You may counter-offer that the creditor simply lists the account as "Settled" rather than delete it altogether. "Settled" is an inherently negative listing but not as negative as "Paid Charge-off." Don't agree to a "Settled" listing until you have exhausted all other possibilities. "Settled" will still trigger a credit denial. You should only agree that the account show "Settled" if all other negative notations (such as "Charge-off", "Repossession", late notations, and "Collection") are deleted at the same time. If you agree to a "Settled" notation, you must continue to work hard to delete the notation through the credit bureau dispute process.
List the account as "Paid Charge-off" or "Paid Collection" or "Paid was 30-, 60-, or 90- days late." If you wound up with this listing on your credit report, you made no attempt to deal with the credit card company. I’ve never heard of anyone not getting at least a “Settled” notation on their credit report.
For The User
******Usman ahmed owner of this blog created this post with his knowledge.All content provided on this blog is not copied from any other blog and site and is for informational purposes only and The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.
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