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Fix My Credit and Debt Settlement Strategies

radioray1025 | Dec 7, 2009 |

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As more and more people battle through unemployment and underemployment the question, "I just want to fix my credit," is something we'll be hearing more and more. Paying your bill is the quickest way to fix your credit. Seems like an obvious answer, but without money, you'll need to be creative. One possibility of getting your credit fixed is through debt settlement or debt forgiveness.

First note. Many debt settlement or debt forgiveness companies are really debt collection agencies in disguise. They negotiate with you to go to your creditors on your behalf. The creditor accepts the pennies on the dollar of the debt settlement arrangement. You happily pay the Debt settlement company, thinking you just escaped a terrible fate. Only to discover the note on your credit report later:

Charged off or Collection Account

Debt settlement will hurt your credit score. Don't go into the idea of using these companies as a solution to "fix my credit" problems. Its not. They can help you fix your debt issues, which in time, will improve your credit scores. You will take short term damage to your report.

Think about what debt negotiation is at its core. Its a settlement for less money than you owe. Take it personal for a moment. You loaned money to a friend. The friend can't pay you back as you agreed. Instead of paying you what he owes, he gives you less. You agree that's all he needs to pay and you are "good" with the settlement. That's debt settlement in a nutshell.

The next time your friend comes to borrow money, how do you feel about it? If someone asked you about your dealings with that friend, what would you say? Its the "what would you say part" that really is what the credit reporting agency does.

Paying your debts is the best long term solution in getting your credit fixed. Debt settlement companies won't solve your credit problems and certainly will make very little progress in answering the "fix my credit" question. You will take a short term ding to your credit using debt settlement. This practice is just another tool to help you dig out of the debt mountain you are under and help you "fix my credit."