Debt
Negotiation and Your Credit Rating
Consolidation
can help many people. Consolidate your debts and lower
your payments. Learn
how.
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Impact
Apparently there is a difference of opinion on this subject.
We discovered some debt negotiation companies that claim negotiating
accounts improves the creditt rating. We also found those
that said debt negotiation causes serious negative impact
into a consumer's creditrating.
We have confirmed that the act of negotiating past due accounts
has a positive impact on a consumer's credit rating, particularly
over the long-term. The reason is that paid / settled accounts
that are negotiated are much better than unpaid past due accounts.
For consumers with unpaid delinquent accounts this makes negotiating
a setlement either on their own or using a debts negotation
service a better alternative to either ignoring the delinquent
past due account or, considering the savings, paying the past
due account in full. Negotiating delinquent accounts does
improve the credit rating.
Negotiating debts can help.
The dilemma lies with those consumers who have current accounts,
and a good credit rating. Current accounts cannot be negotiated.
It seems there is no motivation on the part of the creditor
to accept less than the full balance on a current credit card
account. Therefore, those with current accounts must allow
those accounts to be delinquent to negotiate which does conclusively
affect the credit score. Some consumers' credit score is already
negatively impacted by the debt itself and in this case negotaition
of the accounts may be a better alternative than to continue
making minimum monthly payments for the next 30 years and
still have bad credit.
Need help with your financial situation?
Nevertheless,
debt negotiation or debt settlement for people with current
accounts will probably have an adverse effect on the credit
rating. Our research indicates the consumer credit score is
negatively affected by the delinquency period. This occurs
for two reasons. The account is late and as the delinquency
period extends (60, 90, 120 days) the way the account is reported
by the creditor to the credit bureau has a continuing derogatory
effect on the calculation of the credit score. If the accounts
are current but the credit score is low due to high balances
or a history of late payments, this is not an issue.
Once the accounts are resolved however the credit seems to
improve. The account balance and payment due is reported as
zero. This has a positive impact on the account and the credit.
The history of the delinquency remains, but the account moves
from the current derogatory section of the credit report,
to the closed account section. As months pass this derogatory
history has less and less bearing on the credit score. Mortgage
lenders believe that after 12 months the accounts are given
very little consideration.
If you are considering debt negotiation and you plan to hire
a debt negotiation company it is highly recommended that you
choose a company that meets state and federal guidelines and
has a record with the Better Business Bureau.
For more information: http://www.iGlobalFinancial.com
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See also:
• Debt Free Future is Possible
• fix
credit rating
• Free
Credit Reports
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