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Debt Settlement And My Credit?

Debt Settlement Facts

What happens to my credit when I settle my debt?

Creditors will begin to report missed payments to credit bureaus, which will, inevitability, have an affect on your credit score. These marks cannot be removed even if a settlement is reached, or payments are made, pursuant to the Fair Credit Reporting Act. In stating this however, there are some creditors who will remove the derogatory credit rating; it will not hurt to ask!

Not paying does not mean that interest will stop accruing. Once you go delinquent, many creditors will immediately raise your interest rate to the highest possible interest rate. In addition, they will charge late fee penalties and if your balance exceeds the credit limit, they are more than happy to add over-the-limit fees.

Eventually, if you become very delinquent, a creditor may opt to take legal action, which can result in a legal judgment against you and allow liens to be recorded, as well as garnishments against your wages where legal. However, this is typically a long and complicated process that companies would like to avoid. There is a rule in the financing world: Never throw good money at bad! Nevertheless, creditors have every right to file suit against you for breach of contract.

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How Do I Get a Copy of My Credit Reports?

For more information on your credit and to obtain a free copy of each of your credit bureaus from Experian, Trans Union and Equifax, click on the image to the left.