Credit Repair Or Debt Settlement – Which One Is Best For You?
Posted on May 3rd, 2007 by Marc Chase Posted in Debt Negotiation | 2 CommentsSo you have credit and/or debt issues? Perhaps you have a couple older late pays, a collection account or two and a wallet full of credit cards sucking the life out of your paychecks.
You need help but you’re not sure what kind of help. You’re pretty sure debt settlement and credit repair might do the trick, but you’re not sure exactly which category you fall under.
If that sounds like you, you’re not alone! It’s a confusing industry and consumers are looking for answers. I’m going to give you a general guideline to help you distinguish between the two.
Credit Repair:
Credit Repair can work wonders for improving your credit score. It’s not a magical cure like some people would like you to believe, but many times it can make all the difference in the world.
• Collections, late pays, charged-off credit cards, cell phone bills
• Typically works best for older accounts (a year or older)
• Typically works best for smaller accounts i.e. $2000. or less
• For people focused on improving your credit score
• On average takes 3 to 6 months to complete
• Total program shouldn’t cost more then $200 to $300
Debt Settlement:
Like credit repair, debt settlement isn’t the perfect solution either, but I know some people who have been relieved of some big time financial strain through debt settlement.
• Good for people eyeball deep in credit card debt
• Works best for accounts that are late, or about to be late
• For people with larger debt. (Total debt of over 10K)
• Gives you 12 to 36 months to pay off balances
• Can cut total amount of debt up to 60%
• Temporary damage to credit score.
So there you have it. Obviously I’ve painted some pretty broad strokes, but hopefully it will help you decide which category you fall under.
If you have more specific questions, please feel free to post them here.
I personally refer a lot of clients of mine to do both, they work wonders together. Debt settlement coming first because it does have a temporary negative impact on your credit score. When you are getting near completetion of your debt settlement process begin credit repair and your credit will go way up. Why? Because when go through debt settlement in the begininng your score will take a hit due to falling behind to reach a settlement. However the negative remarks from debt settlement are very easy for an experienced credit repair company to dispute. When you are finished with your settlement process that will have a very positive impact on your credit score as well. Because 30% of your FICO score is made up of your debt to credit-limit ratio and once your debts are settled this will look a lot better and your score will see a significant rise. So this process of settlement and credit repair will have a very positive effect on 2/3’s of your score being your (debt-creditlimit) and (payment history). Now you will be happy that you saved a tremendous amount of money and time through settlement. With credit repair this will help get your score back up along with the settlement. Now you want to really boost your score? Begin showing a new positive payment history. For people who already have a mortgage throughout this whole process your score will go up extremely high(if you make your mortgage payments ofcourse). I hope this clears this whole issue up a little bit, they are both great services if you use the right organizations to help you and make sure that you are educated on the issue.
Sorry Steve, would have approved the comment right away..didn’t notice it until just now.
Good comments