Q: I had credit scores around 740, that before I was 30 days late twice in 4 months on three credit cards with different issuers. I am currently settling credit card debt with Bank of America. I had to take a much lower paying position, hence must settle. The deal is quite good, settling $12,000 in credit card debt for $3,800. Wells Fargo and Capital One will be next. My main concern is my credit score, after missing payments and now settling. Where would they be and how long it would take for them to recover?
A: The two 30 day late payments has already shaved close to 130 points, I am pretty sure, so let us suppose you are at 610 to 620 credit score range. Settling the remaining credit card debt with Bank of America will probably knock it down another 25 points or so. Obviously, settling a credit card debt means that the lender agrees to accept less than the amount owed on the account, thus indicating a higher level of risk. Since your credit score lost quite a few points, the debt settlement impact is less severe, since the higher the scores, the lower they fall. Once you are done with Bank of America, settling debt with Wells Fargo and Capital One will take another 40 to 50 points of your credit score.
How long would it takes to get your scores back, say in mid 600s? Probably two, may be three years of impeccable credit history. You will need to use your credit cards regularly while keeping utilization rate low, among few other things..
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Jamey Hummons (1 year ago)
Personal debt settlement would seem to be becoming as a potential solution for people struggling with credit card debt. For the past several years I have been watching the trend very closely and it is very difficult to track what is delivered for your settlement agreement. I know there are a large group of service providers out in the market that deliver fantastic service and the debt settlement customers truely feel the benefit, but I am also aware that there are a large group of debt settlement providers out there that are only focused on collecting customer payments and bringing in new members. This is obviosly why we see all this new fed regulation regarding the debt industry. My sister in law used a debt operation and is actually very very very satisfied with the outcome.
Settling credit card debt with Bank of America | Credit Cards | Your way to wealth (1 year ago)
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