Debt Settlement – Restoring Your Credit 

Since you’ve found this article, there’s a good chance you’re considering debt settlement, or have already enrolled in or completed a debt settlement program. Either scenario puts you in a position of wondering about the restoration of your credit following the completion of a debt settlement program.

As you know, debt settlement allows for individuals to negotiate with their creditors, and ultimately reach a satisfactory agreement to pay their credit accounts off for less than the full balance. Normally, people successfully reach settlement amounts of 50% or less of the actual amount that is owed.

How does this process affect your credit score? Well, debt settlement in itself doesn’t negatively impact your credit score – delinquency, however, does. You see, creditors won’t agree to settle your accounts for less than the full balance unless the account has reached a certain stage of delinquency. The majority of individuals who choose debt settlement do so because they’ve previously contacted their creditors for some type of interest reduction or relief, only to be told that the interest rate and fees being charged will remain, and no reduction can be granted. This results in many people seeking an alternative form of relief – either bankruptcy or debt settlement.

Once your accounts become delinquent, obviously your credit score will be reduced, and in some cases, significantly. The good news is that you can indeed restore your credit rating after the process of debt settlement is behind you. Fortunately, your credit score will automatically increase after your creditors report your account’s updated status to reflect a zero balance. In some cases, however, it may be necessary for you to become proactive and work on your credit reports on your own, one at a time.

You see, some creditors are a bit “sloppy” when it comes to credit reporting, and they may not automatically update your accounts. On the other hand, sometimes mistakes are simply present and correction of these mistakes is required.

Of course if you become a client, we believe in being proactive to ensure that your account status is updated with the major credit bureaus sooner rather than later, therefore, Donaldson Williams forwards your settlement documentation free of charge, to all three credit reporting agencies, as well as a request to update your records immediately following a settlement. Once the updates have been made, you can expect a credit score in the mid-600 range within approximately 9-12 months after your accounts have been paid off. This range may be even higher if you’ve kept up on your mortgage(s) and/or automobile loans.

Many debt settlement firms, including Donaldson Williams, Inc., will provide you with the necessary information and documentation required to begin the process of restoring your credit. You see, there really is light at the end of the tunnel, and you will once again hold your head high with a respectable credit rating. I wish you the best in your endeavor to put debt behind you and restore your credit.

If you should have any questions, or need assistance, feel free to contact us. For a free consultation, click here. Remember, Donaldson Williams, Inc. charges absolutely no monthly fee and no set-up costs because we work on a contengency basis, and you don't pay a fee for our services until after a satisfactory settlement has been reached with your creditor(s).