Impact of Debt Relief on Credit Scores

While applying for a car loan, mortgage or a credit card, you would realize the undeniable importance of credit scores. Your creditor would surely cross check your credit score with one of the approved credit bureaus. Each bureau is expected to maintain its own records relating to your credit history and the versions may vary a little bit from one bureau to another. It implies that your exact credit score would be varying depending on the bureau chosen by your creditor.

Your credit score is supposed to be fluctuating as per the credit decisions you took, over prolonged periods of time. Keep in mind that there exist several diverse actions as well as non-actions that are known to impact your credit scores positively or negatively.

Some Credit Score Facts

Credit scores keep fluctuating between exceptionally high 850 and rock-bottom 300. In the current economic scenario, most American citizens have a credit score somewhere between the mentioned two extremes. Credit scores under 620 are considered to be poor, while 750 and above are considered to be superb. A credit score of 650 and above is good and pretty much acceptable.

Debt Relief Options Open to You

If you have failed to pay off all your debts by adopting an aggressive payment program or even opting for a specialized Credit Counseling Service, you may think of seeking debt relief. You could choose from two debt relief options such as debt settlement and bankruptcy. Both debt settlement and bankruptcy would adversely affect your credit profile. However, you have to face reality and come to terms with the fact that you cannot escape going through a phase of temporarily-reduced credit scores in case you are thinking of making a fresh financial start. To know more about debt relief visit our website.

Bankruptcy and its Persisting Effects on Credit Scores

Bankruptcy is a fantastic debt relief tool. However, its impact is said to linger on your credit score for almost 7 to 10 years. It is not advisable to opt for bankruptcy unless there is a grave financial crisis. Your credit score is sure to dip, but how much it is going to go down depends primarily on pre-filing value.

Debt Settlement Much Better Alternative

Expert debt consultants believe that debt settlement is much better alternative to opting for bankruptcy. Debt settlement is known to impact your credit profile mildly. Though, it is an accepted fact that when you opt for a debt settlement program, the credit score is sure to drop. However, the good news is that post debt settlement; its impact is not long-lasting and definitely less shuddering. Though a debt settlement program causes your credit score to fall, it would only dip half of what is expected of bankruptcy.

The entire debt settlement process could be wound up within about two to four years at max. However, the drastic impact of bankruptcy would be lasting for many years. During the next 7 to 10 years after declaring bankruptcy, you would not have the freedom to acquire a bank account, credit card or even a car loan. Debt settlement is really a discreet process whereas bankruptcy records are open to the public and can be accessed easily by future employers and even lenders.

If you wish to effectively reduce your unsecured debts, it is a wise idea to choose debt settlement over bankruptcy. Once all your debts have been repaid, you could consider starting to reconstruct your credit profile so that you could enjoy future financial stability.

Author Bio: Anne Fitzgerald is a journalist at a renowned pink paper feature. She also runs a consultancy email helpline and a blog for those in need. She tries to cover diverse topics ranging from wealth management to debt relief and several others. If you wish to know more about debt relief visit our website.