Nude american adults - Consolidating debt without hurting credit score

Your credit card company will notify the credit bureaus that you settled your account for less than the full balance.This has a considerably negative effect on your credit scores because it indicates you lacked the necessary debt management skills to pay creditors in full.That negative mark will stay on your credit history for seven years.

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If your credit card debt is financially overwhelming, and the prospect of paying it all off seems impossible, negotiating with your credit card company for a lower balance is probably an attractive option.

Should your credit card company agree, it will settle your outstanding debt for less than you owe.

While debt settlement is a lifesaver for some distressed debtors, it almost always has a negative effect on your credit rating.

Even if you pay off the settlement in one lump sum, don't expect your credit card provider to simply report the account as “paid” to the credit bureaus.

If you're paying on time, the credit card company has no reason to believe you won't continue doing so.

This means you'll have to stop making credit card payments to get the settlement you want.

Missed payments are terrible for your credit scores.

A single missed payment will cost you roughly 60 to 100 points -- and you'll need to miss several for debt settlement to be an option.

The portion of your debt that you did not pay is a tax write-off for your creditor.

Unfortunately, a tax write-off for the credit card company translates to a tax debt for you.

Federal law requires creditors to report any write-offs that exceed 0 to the Internal Revenue Service.


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