Debt Settlement along with your Credit Score

As a consumer, we need to understand the meaning of the word credit. Credit is considered as either secured or unsecured monies loaned to you by a lender, in return for future payment. Lenders or creditors who have advanced to you monies to purchase your home or credit card companies/retail stores which allow you to charge purchases with the understanding you will pay them principal and interest over a period of time.

In order to qualify for anytime of credit, you need to have good credit. A good credit score means you are a low risk consumer while a lower credit score means you are a riskier borrower. Credit scores from the three major credit bureau’s (Equifax, Experian or TranUnion) range from 300 to 850.

However, according to a recent article in “USA TODAY”, lenders are clamping down on credit and credit scores are taking a hit. So what does this mean for the consumer? Basically this means that lenders are reviewing all of their consumer credit cards and making determinations about who is using their credit cards. Lenders are closing credit card accounts and lowering credit limits for millions of consumers who have never paid late. When a card is closed by a lender this effects your credit score.

However, maybe as a consumer you had a fair to good credit score. But do to the recent economic environment you are not able to keep up with your financial obligations. This is going to affect your credit score since late payments, mortgage modifications and high balances are now taking a bigger toll on your scores.

So when you are looking at debt settlement program and you are informed that your credit score will take a hit. You credit score may had already taken a hit because of your late payments and too much credit with high balances prior to entering into a debt settlement program.

Basically it does not matter whether you had good credit before since the lenders are taking steps to reduce credit and closing accounts for the consumer. This affects your credit score in a negative way whether you are current on your payment or delinquent on your payments.

So do not let the fear of your credit score dropping from looking at a debt settlement program as an alternative to your financial situation.

What is Re Aging a credit account?

Re Aging a credit account is a way to improve your credit report and your credit scores. This approach is helpful only if you have had a short term problem, like a layoff and now you are back on your financial feet again. What is re-aging? When a creditor re ages your account they take off from your credit account negative information surrounding your late payments. Your account will go from delinquent to good standing. Your credit score should go right up again. Sometime just changing one item can have your credit score go up over 100 points.

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What is credit repair?

Credit repair is the process of improving your credit score. Bad credit is the major factor for people not being able to finance their consumer or home purchases. It can also be a process of disputing or fixing discrepancies shown on your credit report in the credit bureaus. A credit must be able to show proof of the existence of a debt. If they can't, they must take it off of your credit report.

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