Posted on: 04th May, 2009 09:56 am
We are working with a bank to settle a loan on an investment property that is significantly under water. The settlement is for about 50% of the 160K loan.
In talking with the bank they have said that the loan will be reported as settled for less than owed. We have never missed a payment and do not plan to miss any before settlement.
How will this settlement and the terminology impact our credit score? Is there something else I should negotiate for in terms of wording on the credit report?
In talking with the bank they have said that the loan will be reported as settled for less than owed. We have never missed a payment and do not plan to miss any before settlement.
How will this settlement and the terminology impact our credit score? Is there something else I should negotiate for in terms of wording on the credit report?
HI, It will go onto your credit report and it will negatively effect your score by how many points i cannot be sure but your score will go down but settling the debt is alot better then not paying it.
It will for sure impact your credit score. If you re struggling each month to make the minimum payments on your accounts, and debt settlement seems to be your best option, a temporary reduction in your credit score probably shouldnt influence your decision too much. Rather, peace of mind and the ability to pay your bills should be your main concern. If you take a realistic look at your finances, you may very well see that youre in deeper than you thought. I urge you to gather all of your bills and add up your monthly expenses including your credit card bills, and then minus your credit card bills. After you ve made the comparison, youll likely understand that the benefits of debt settlement easily outweigh the few months you need to deal with a reduced credit score.
Hi TDD,
As far as I know, a debt settlement will remain in your credit report for at least 7 years like any other negative item. Your credit score can go down by 200 points.
Thanks
As far as I know, a debt settlement will remain in your credit report for at least 7 years like any other negative item. Your credit score can go down by 200 points.
Thanks
One way to look at is, if you have very good credit score now, then it will lower your score. If you have a already low score it may impact positively, based on the following theory.
Your FICO score is based on your payment history (35%) and on the amount you owe accoutns for 30% of the rest. Once your debt is settle the score will go down due to your credit history and it may go little positive due to the fact that you owe less now.
Othe remianign facotrs in yoru credit report will be based on
1. Lenght of credit History (15%)
2. New Cedit (10%)
3. Type of credit use.(10%)
Your FICO score is based on your payment history (35%) and on the amount you owe accoutns for 30% of the rest. Once your debt is settle the score will go down due to your credit history and it may go little positive due to the fact that you owe less now.
Othe remianign facotrs in yoru credit report will be based on
1. Lenght of credit History (15%)
2. New Cedit (10%)
3. Type of credit use.(10%)
I must agree that yes if you can barely keep making the payments monthly then debt settlement is a good choice as you can always rebuild you fico score and its not worth stressing and risking your health over debt.