We get a lot of emails everyday in regard to our credit repair and/or debt settlement programs so we decided to start posting them here.

If you have any questions you would like answers, please feel free to email us and we will answer them the same day.

Question: We have about 42,000 in unsecured debt we need to settle on with a fico of about 658 as of last month. We also want to purchase a home in about 1 year at the most. I asked another company if settling with these creditors would effect our chances of buying the home.

They told us it shouldn’t hurt our chances at all but I wanted to get a second opinion and since you do mortgages too, I thought you would know.

Thank you in advance.

Lorraine.

Answer:

Lorraine,

Thank you for contacting us, but I’m afraid I have to disagree with the advice you’ve been given. In fact, it is dead wrong.

While you are in settlement, your credit will take a hit. How many credit lines you are including in your settlement will determine how much damage is done to your credit score temporarily.

Each credit card that is included in settlement will turn to a late status during settlement which in turn will hurt your credit score. If you’re settling one card, the damage won’t be too bad. If you are settling 10 cards, the damage will be far greater because its 10 late accounts showing on your credit report.

With all that being said, there are some strategies that may help mitigate the damage to your credit. Debt settlement is not always the perfect solution. For some it’s perfect, for others it may not be the right solution.

We’ve sent you a worksheet that will help you decide the best course of action for your particular needs.