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CREDIT SCORE GOT DAMAGED DUE TO DEBT SETTLEMENT? TIPS TO RECOVER!

Posted by on Thursday, November 15th, 2018 in Blogs

Finally, debts are not bothering you anymore as you have kicked them off through debt settlement. And now, you are relaxed, as you no longer have the debt burden on your shoulders, but what about your credit score? Was it the same as before? Well, you should be aware of the fact that debt settlement hampers credit score, as you’re unable to pay the full outstanding loan amount.

After the debt settlement process:

Consolidate your debts with a good Debt Consolidation company. Your debts will be disposed of successfully. But, you also need to pay attention to your credit score. Check out some tips to restore your credit score after a debt settlement program:

*Use new lines of credit: * You should apply for fresh lines of credit to increase your credit score. For this, you can apply for secured credit cards that routinely report to all the three credit bureaus (Equifax, Experian, and the Trans Union). To raise your credit score, you have to deposit a certain amount in your credit card account first. For example, if you want to get $600 credit line, then you have to fund your account with the same amount. After that, manage your account regularly to increase your creditworthiness. It’s suggested that you don’t apply for more than two lines of credit. Credit Card Broker.

*Carry low balance in your accounts:* Never cross 30% of your current account balance. You should maintain a low balance to keep negative information away. If you use your credit accounts regularly and don’t cross the credit limit, then you’ll see a rise in your credit score.

*Pay off your bills on time:* Making timely bill payments helps to restore your credit score. It’s always good to make a habit of paying the bills before the arrival of the due date. Delayed payments will damage your credit score. Never wait for too long to pay your bills.

*Use credit cards that are designed for bad credit:* There are credit cards available on the market that are specifically designed for the people with bad credit score. If you have a bad credit score, then you should use one such card to give a boost to your credit account. These credit cards come with very high-interest rates. Horizon Gold Credit Card is one such example that comes with an interest rate of 23.99%.

*Review credit report for any error:* As humans, it is quite natural to commit errors. Errors are common! But, you shouldn’t forget that these errors could also drag you into endless troubles. Whenever you get the copy of your credit report, make it a point to review all the details carefully and minutely. Even a small mistake can ruin your credit score. If you find out any wrong information or any other mistakes in your credit report, then immediately inform the credit reporting agency about it, so that, they can rectify it. Review your credit report at regular intervals and dispute incorrect information to maintain a good credit score.

*Practice good credit habits:* To increase your credit score after debt settlement, you should adopt good credit habits. Pay your bills on time; never take too many credit cards and charge only what you can afford to give a boost to your credit score. This’ll help you to gain the confidence of the creditors.

*Don’t close existing credit accounts:* People have this common misconception that closing existing credit accounts with bad credit will improve their credit score. Well, this is absolutely wrong! The tenure of your existing credit accounts can actually build up your credit score. Keep your old credit accounts open to maintain a good credit score.

*Don’t stop using your credit:* People with bad credit often stop using it. This is only helpful to you if you’re trying to pay off debts. If you aren’t planning such things, then it’s better to use your credit, as it won’t hurt your credit score. Try to open and use a small credit account and pay off the balance each month in order maintain a good credit score.

Your credit score reflects your creditworthiness. If you have gone through the process of debt settlement, then you should follow the above tips to rebuild your credit score in order to gain the confidence of the lenders.

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