Latest News, Breaking News, Entertainment, Gaming, Technology News

Does Credit Relief Hurt Your Credit Score

If this article caught your attention, that’s a great sign: you’re finally ready to do something about your all-consuming debt. You’ve settled on debt relief as a solution, but you’re worried about possible implications, such as damage to your credit rating. Well, it all depends on the form of relief you employ. Let’s look at your options.

Types of Debt Relief

Does credit relief hurt your credit score? Let’s look first at the kinds of debt relief available:

Debt settlement

This financial strategy basically calls for you to hire a company to negotiate with your creditors – often credit card issuers – to get them to allow you to make a one-time payment of less than what you owe to settle your debt. You’ll usually be asked to cease paying your creditors and instead deposit funds into a special savings account. Once you’re saved sufficient cash, the debt settlement company will begin talks with your creditors in earnest. While creditors are not required to accept settlement offers, they often do because they realize they may otherwise get nothing.

Debt management

Here, you’ll pay a nominal monthly fee to have a credit counselor assist you in planning, and hewing to, a realistic repayment plan. Usually, debt management plans will outline what you need to pay each month and for how long. Your counselor will hold your proverbial feet to the fire; you’ll be accountable for sticking to your plan. You also may be required to forego applications for more credit while you’re in the program.

Debt consolidation

The method lets you roll your debts into a single payment, ideally with a lower interest rate than what you’re now paying. The process also streamlines bill paying since you only have a single, fixed monthly payment to deal with. This kind of credit relief can be accomplished through a personal loan or balance transfer card.


Ah, yes, the strategy of last resort. Yet it is a viable option for dealing with overwhelming debt. The process entails having a court assess your situation and make certain you’ve exhausted every potential remedy before discharging your debt. Depending on whether you file Chapter 7 or Chapter 13, a discharge will clear some or most of your current debts.

How Do Debt Relief Plans Affect Credit?

Depending on the type you choose, debt relief can be positive or negative for your credit. Let’s look.

Debt settlement

Although your credit may already be shaky and what you’re doing is getting a fresh start, debt settlement does the most damage. That’s because most plans call for you to skip payments while they negotiate on your behalf. After all, debt relief companies are focused on relieving you of debt – not on your credit rating. That will improve with time.

Debt management.

If you stick with the plan your counselor created with you, you can get out of this with your credit scores unscathed. The key here is not missing any payments, which means your spending must be under control. You need to make a budget and stay with it.

Debt consolidation.

If you manage it wisely and responsibly, debt consolidation is a good way to get debt relief that shouldn’t whack your credit scores. When a lender conducts a hard check on your credit, however, your scores will decrease a few points. Here, too, you need to make all your payments on time, as just a single missed payment can knock your score down.


This filing will significantly affect your scores and will hang out on your credit report for seven to 10 years, depending on which type you choose. Before pursuing this strategy, see if another one, such as debt settlement, makes more sense.

So, does credit relief hurt your credit score? It might – it depends. But it’s likely that, if you’re seeking debt relief options, your credit situation is less than ideal. To keep from inflicting more damage, choose a debt relief strategy today.

Comments are closed.

buy ivermectin for humans ivermectin for sale
$255 payday loans online same day