Is debt settlement good for your credit?
There are many of us who are been turned down by any potential creditors or financial institutions when they are applying for new credit. The reason is because of their previous credit history. The past derogatory remarks on their credit report is not letting them getting any new credit from the future lenders. Even if some company is willing to offer some credit despite their bad credit history, there is a very good chance of them getting scammed by some fraudulent company.
When you are having a bad credit history, it is time to do something and improve your credit ratings. When you are applying for any new credit, the potential lender goes through your credit history and wants to know how you have been handling your previous accounts. He will easily reject your credit proposal if you are having accounts on your credit report in a very bad standing. Before you go to any lender and apply for any new credit, you must repair your bad credit.
Consult a debt settlement company who will negotiate with your creditors and the collection agencies and settle your accounts according to what you can afford. The creditors want to get their money back. So, even if they are not able to recover the full balance, they will be willing to settle the account on the principal balance. The debt settlement company will negotiate with your creditors and get the debts paid off according to what you can afford in the program. Most of the interests and fees will be waived off from the total balance and then, they will negotiate on the principal balance. You will be making monthly payments in the debt settlement program and your debt counselor will be buying the time until you have sufficient balance sitting in the escrow account opened with them. If the creditor pushes you to make a lump sum payment, your debt counselor will put down a small payment and the rest of the balance will be put on a payment plan. This way, the creditor will be assured of getting his money back. They may also be able to negotiate with them for a fair reporting on your credit report. Once you have settled the account with your creditor, they will report to the credit bureau and it is much better to see an account reported as “paid in less than full” or “paid as agreed” on your credit report. Your credit scores will start getting better after some of the accounts that were already in bad standing are getting paid off one after the other. This will help you in negotiating with your future lenders and get decent interest rates on new credit.