How much will a debt reduction program lower my credit score,and is it a good idea to use one?

around 30000 in credit card debt, however i am current on all my bills

How much will a debt reduction program lower my credit score,and is it a good idea to use one?

It%26#039;s bad - it can knock your credit down 200 points or even more.

But, unless you can pay down your debt aggressively, it%26#039;ll be harder and harder to get any new credit.

If you do the debt reduction, you may save a lot of money and payoff your debt, and your credit score is made basically of the following items:

35% -- punctuality of payment in the past (only includes payments later than 30 days past due), about 35% of your credit score;

30% -- the amount of debt, expressed as the ratio of current revolving debt (credit card balances, etc.) to total available revolving credit (credit limits)

15% -- length of credit history

10% -- types of credit used (installment, revolving, consumer finance)

10% -- recent search for credit and/or amount of credit obtained recently

So, when your do your settlement, reduction, whatever name they call it, your score takes a huge blow, because of the 35% portion of it - payment history.

But soon it starts to rise back because:

- your amount of debt (the 30% portion) is a lot lower;

- you won%26#039;t get new credit (the 10% portion);

- your payment history slowly starts to rebuild after the debt settlement.

In about a year, you should be at least pretty close to your today%26#039;s score.

And even better later on, if your keep your sense and don%26#039;t overspend.

Again, you probably won%26#039;t be able to get new, favorable credit anytime soon, so maybe it%26#039;s an option to bite the bullet and resurface a year or two from now in a better situation.

What I%26#039;ve learned early on is that once you put yourself in trouble, it%26#039;s veeery hard to find a painless solution.

So you have two options in my humble point of view:

1- keep paying the minimum or close to it, keep a so-so score, and keep your balances high.

Unfortunately, unless you throw a lot more into your payments, your situation will be the same two years from now;

2 -or do the settlement, save about 12 to 15 thousand, screw your credit (which may be useless anyway by now), and then rebuild your life and your credit in two years.

Godspeed !

How much will a debt reduction program lower my credit score,and is it a good idea to use one?

If you are looking to do use a compnay who %26#039;reduces%26quot; your interest rate?? That is horrible for your credit as creditors view that as one step away from bankruptcy. Iwould try to negotiate with the creditors directly instead.

How much will a debt reduction program lower my credit score,and is it a good idea to use one?

I am in the mortgage industry and that looks very bad on credit. It effects your credit similar to the way a chapter 13 baqnkruptcy would.

If possible try to refinance your house and take out cash to pay them off.

If you do not own your residence, then see if you can move some funds around, for example transferring to a 0% card. Just be careful, and read the fine print on the cards, so are only 0% for 3 months. Try to get one that is like that for a year or more.

How much will a debt reduction program lower my credit score,and is it a good idea to use one?

If you are current on your bills- that is good news. If you are concerned about your credit score- one of the best ways to become debtfree is the ADE program. (Automatic Debt Eraser). This will actually raise your score- and will show you how to lower your current rate of interst, with out going to consumer credit counseling- or refinancing.

You may contact me directly for any questions you might have.

Courntey Kostelecky

founder DebtFreeNews.com

Author Credit Card Secrets they DO NOT Want You To Know.