Problem

I have enrolled into a debt settlement program to pay off my credit card debts. I got into debt problems few years back due to some major financial mistakes. My total credit card debt amount is around $45,000. After enrolling into the debt settlement program, I have stopped using plastic cards. I don’t want to incur debt again. I try to pay my bills after receiving my paycheck every month. I am trying my best to relieve my debt burden.

A close friend of mine recently told that debt settlement will appear on my credit report. Is it true? If yes, then for how many years. Will I not get any loan in future? Thanks for any information.

Solution

Yes, it is true that negative items remain on credit reports for 7 to 10 years from the first date of default. For example, if you have defaulted on a credit card on10th May 2004, then it will be appear on your credit report till 10th May, 2011. However, after you have paid off your debt through debt settlement, the account status will be updated on your credit report. It will be either reported as “Paid as Settled” or “Paid in Full” on your credit report. It will be best for you if your creditors update the account status as “Paid in Full” on your credit report.

I am assuming that the debts you are settling are already few years old. So, in such a situation you need not to wait for another 7 years. They will be removed from your credit report within a few years if everything goes well.

Normally, debt settlement makes a negative impact on credit score. It may ding your credit score by 125 points also. So, after settling your debts, you should start taking active steps to repair your credit. If required, get help from a reliable credit repair agency in future. Make sure you add some positive information on your credit report on a regular basis.

As far as securing loan in future is concerned, it will depend upon the lenders. Usually, lenders like to give money to the consumers with a clean credit report. However, when they will see that you have at least settled your debts instead of neglecting them, they may agree to accept your loan application.

I think you have stopped using credit cards in fear of getting into debt problems again. However, if you pay all your bills through cash or debit cards, then it will not help you repair your credit simply because these transactions won’t be reported on your credit report. This is why, you may use a secured credit card with low credit limit to restrict you from spending more than what you should do. Use a secured credit card which is reported to the credit bureaus. This will enable you add some positive information to your report.

Finally, always make sure you pay all bills on time. When you make payments on your loans as per the agreements, positive information will be added on your report. This will help you get loans and lines of credit at reasonable terms and conditions.

A credit report is extremely important if you want to apply for a loan or if you are buying a house or any related matter. It gives you a detailed description of your credit history and will give a leader an idea about your credit history. When you are looking for your report you can look at credit report gov. They will give you a detailed description of your report. The report will contain your credit history for the past seven years. The information is useful to lenders at they will have an understanding of your credit worthiness. If the lender approves or rejects your loan then it will also be a part of your credit report. Each person has three reports which are published by three major credit bureaus. Each report is slightly different but over all they basically say the same thing.
The report has a lot of information at the top of the report if your personal identification information, which includes your address, name date of birth and social security number. Sometimes the reports also have listed your employment information i.e. your current and past employment information. The obvious information in it is your loan information which is your car loans, personal loans, house loans, credit card debt, student debt and any other credit that you might have in your name. It is important never to miss a credit card or any payment because if you do it will be written on your credit report and may hinder your chances of a loan. It also contains credit applications, court judgments, bankruptcies etc. It goes to an extent of having your child support payments as well.
The information on your credit report will stay on there for seven years and after that it is erased. Some information has different time spans e.g. bankruptcy will stay on your report for ten years and student loans will stay on indefinitely. It is import never to defer on a payment because any negative information will remain on there until it is scheduled to expire. It contains many aspects of your life and lenders have to look at it and take it into account before lending you any money. It will also affect your rate of interest. Good credit scores will earn you a low borrowing rate while bad scores and get you into bad borrowing rates. Even insurance companies take credit reports into account.

When it comes to credit repair tips, one of the most important things that I can share with you is based on the Fair Credit Reporting Act or otherwise known as (FCRA). One of the best things that this act does for you, the nationwide consumer is to provide you with a free copy of your credit report once every 12 months.

The FCRA requires by law the accuracy and privacy of all the files in the nation’s consumer reporting companies. For your protection, the Federal Trade Commission (FTC) acts as a consumer protection agency and enforces the FCRA in respect with the consumer reporting companies.

Why is it so important?

Well think for a moment. What type of information is contained on your credit report? It tells your address, how you pay your bills, if you filed for bankruptcy, and even if you’ve ever been sued or arrested. These nationwide consumer reporting companies sell the information on your report to creditors, insurance companies, employers and other types of businesses that use credit to evaluate you as a person.

So here are a few details about your rights under the FCRA. My goal is to help you understand and exercise your rights according to this act. After all you’re the customer any way right? Don’t you want your creditors to get an accurate picture of you? Of course you do!

The Fair Credit Reporting Act was originally enacted in 1971. So what are your rights according to the act? You can get a free credit report. So be sure to exercise your right to get one yearly.

Be Careful in Getting Your Free Credit Report

There are many websites that offer a free credit report. Be sure to read the fine print carefully. Once you are signed up for the free service, after your trial period, you will be billed on your credit card. If you do not cancel before the trial period is over, you will be agreeing to allow them to charge your credit card for the monthly monitoring service. Some of you many really want this so you can monitor your credit. But if you do not, be sure to cancel before the trial period is up.

So with that said, the key to watch for is the fact if you have to give credit card information when signing up, it’s not really a “Free Credit Report” like the one I described to you above.

You will find that some of these “imposters” even use the terms “free credit report” in their domain names. Others you may find have domain names that misspell annualcreditreport.com hoping you have a typo when entering the domain in your address bar.

A few of these “imposter” sites will direct you to another site without you realizing it to collect your information so they can try and sell you something. So I just want you to be aware of what’s out there my dear friend. The Internet is good for us in getting information, however we must be alert.

In conclusion for credit repair tips, make sure to get your free credit report yearly. Also, be aware of what you are signing up for so you are not surprised later.