The effect of our debt settlement program on your credit score will partly depend on your current credit status before starting
the program. Few people with debt troubles have perfect credit
to begin with. In general, your credit score (usually called
the FICO score) will decline during the program, and will begin
to improve again after you have become debt-free.
There are several
key points to bear in mind here. We recommend against applying
for new credit while going through the program. It simply doesn't
make sense to take on new debt while you're trying to tackle
your existing debt problem. So the short-term
decline in credit score is rarely a problem for clients.
Also, the credit score
itself does not take into account the debt-to-income
ratio, which
is used by lenders (especially in the mortgage industry) to determine
whether you qualify for a home or auto loan. In other words,
you can have a high credit score due to a clean payment history
(even though it's been killing you financially to keep up those
payments) and still be denied a new loan because you already
carry too much debt.
By completing a debt settlement program,
your debt-to-income ratio will improve dramatically!
Any way
you look at it, the effects of Debt Settlement on your credit will certainly be less damaging than
the 10-year derogatory mark made by bankruptcy.
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