Debt Reduction And Credit Score
Posted on
July 28, 2009
at
5:00 am
How would applying for a debt reduction program affect the credit score?
Posted on
July 28, 2009
at
5:04 am
It depends on which debt reduction program you are enrolled in. When you enroll in a debt settlement program, it means that your account is already delinquent for a while or is already past due. Here's the breakdown of your credit score:-35% of your credit score is determined by your payment history (this gets affected when you stop paying the creditors) The longer you don't pay the more negative its effect is on the payment history segment of your credit score- until your debt is settled.And the rest:- 30% is by the amount owed-15% by the length of credit history-10% by new credit -10% by the types of credit you used
Posted on
July 28, 2009
at
5:07 am
I agree with peterpanamerican, but on the other hand if you have taken steps into reduction of your debt, like settling it, it improves the amount owed segment of your credit scoret.
Posted on
July 28, 2009
at
5:17 am
You might want to look at the other factors in the credit report that lenders/creditors look at to determine which consumer is a credit risk and which is not: Educational Level. Of course, the higher the level, the better. How long the consumer has been staying at his/her current residence. If the consumer moves a lot, then the reason behind them must be valid. How long the consumer is with his/her current job. The longer the consumer works for the same company, the more stable he/she appears. Is the consumer a homeowner or renter? Homeowners win this one.
Posted on
July 28, 2009
at
5:20 am
Is bankruptcy considered a debt reduction solution or debt elimination option...I think it's the latter, anyway, how would bankruptcy affect the consumer's FICO score?
Posted on
July 28, 2009
at
5:25 am
Okay a little bit on the FICO score, It is the most widely used scoring system and it stands for the Fair-Isaac Corporation Credit Score. The score ranges from 200 to 850. According to FICO studies, 40% of the population score 690 or lower--on the average, while 40% score 745 or higher, and just 20% score above 780.The consumer's credit score is determined by comparing his/her credit to those of the other people in the general population. After the consumer files bankruptcy his/her credit is only comparable to those people who also have filed bankruptcy.
Posted on
July 28, 2009
at
5:28 am
Is it a fact or myth, that filing bankruptcy can improve the consumer's credit score? How's that possible?
Posted on
July 28, 2009
at
5:31 am
It's because the consumer's score isn't likely to suffer all that much in bankruptcy--when a consumer files bankruptcy it means that he/she is already in serious debt -- or is not exactly maintaining a high FICO score to begin with.Filing bankruptcy wipes the negative marks on all the scoring categories.
Posted on
July 28, 2009
at
5:35 am
I agree with rasputin, and to add to what he's said the consumer's high balances will be removed in bankruptcy, together with late payments or records of unpaid debts. Both types of bankruptcy, Chapter 13 and Chapter 7, affect the credit score in the same manner.
Posted on
July 28, 2009
at
5:49 am
The other debt reduction option, credit counseling..does it affect the credit score the way debt settlement affects it?And in addition to the bankruptcy talk, if the consumer has been really suffering when it comes to payment before bankruptcy, his/her score isn't likely to fall much further, in fact, it is possible to up the score to 700 in And with a few clever credit repair strategies, your score could be back in the 700s two to three year--if the consumer learns to repair it cleverly.
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