We in Telegram
Add news
March 2010 April 2010 May 2010 June 2010 July 2010
August 2010
September 2010 October 2010
November 2010
December 2010
January 2011
February 2011 March 2011 April 2011 May 2011 June 2011 July 2011 August 2011 September 2011 October 2011 November 2011 December 2011 January 2012 February 2012 March 2012 April 2012 May 2012 June 2012 July 2012 August 2012 September 2012 October 2012 November 2012 December 2012 January 2013 February 2013 March 2013 April 2013 May 2013 June 2013 July 2013 August 2013 September 2013 October 2013 November 2013 December 2013 January 2014 February 2014 March 2014 April 2014 May 2014 June 2014 July 2014 August 2014 September 2014 October 2014 November 2014 December 2014 January 2015 February 2015 March 2015 April 2015 May 2015 June 2015 July 2015 August 2015 September 2015 October 2015 November 2015 December 2015 January 2016 February 2016 March 2016 April 2016 May 2016 June 2016 July 2016 August 2016 September 2016 October 2016 November 2016 December 2016 January 2017 February 2017 March 2017 April 2017 May 2017 June 2017 July 2017 August 2017 September 2017 October 2017 November 2017 December 2017 January 2018 February 2018 March 2018 April 2018 May 2018 June 2018 July 2018 August 2018 September 2018 October 2018 November 2018 December 2018 January 2019 February 2019 March 2019 April 2019 May 2019 June 2019 July 2019 August 2019 September 2019 October 2019 November 2019 December 2019 January 2020 February 2020 March 2020 April 2020 May 2020 June 2020 July 2020 August 2020 September 2020 October 2020 November 2020 December 2020 January 2021 February 2021 March 2021 April 2021 May 2021 June 2021 July 2021 August 2021 September 2021 October 2021 November 2021 December 2021 January 2022 February 2022 March 2022 April 2022 May 2022 June 2022 July 2022 August 2022 September 2022 October 2022 November 2022 December 2022 January 2023 February 2023 March 2023 April 2023 May 2023 June 2023 July 2023 August 2023 September 2023 October 2023 November 2023 December 2023 January 2024 February 2024
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
News Every Day |

Does Debt Relief Hurt Your Credit?

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations.

Debt relief won’t hurt your credit alone. However, closing your oldest accounts can drastically lower your standing.

Debt relief and debt settlement options don’t hurt your credit score on their own. These programs aim to help reduce your debt and if that debt is revolving credit, it can reduce your credit utilization and improve your credit. However, a debt relief program could accidentally drop your score if it closes your account with the longest payment history.

There are many debt relief options available, so it’s important to consider your unique financial circumstances when choosing a plan. We’ll help you weigh those options and share several resources that can help you learn how to reduce debt over time.

Key Takeaways: 

  • Credit utilization makes up 30% of your credit score.
  • Each debt relief option has its pros and cons.
  • Having good credit can help you secure better loans.

How Debt Relief Programs Affect Credit

Your credit utilization rate makes up 30% (roughly one-third) of your overall credit score. When you pay off revolving debt, your credit score often will improve if that is the area most impacting your credit. TIf you’ve nearly reached your credit card’s  total credit limit. Keeping your utilization rate below 10% is ideal, but less than 30% is also a strong move.

Below is a breakdown of the five factors that influence credit, according to the FICO® credit scoring model:

The type of debt relief program you use can also positively or negatively affect your credit. Debt settlement, for example, utilizes some tactics that generally have a more negative effect than other types of debt relief programs. 

Credit.com’s free credit report card tool can help you better understand your current creditworthiness and which factors you need to work on to help you improve your standing.

The Main Approaches to Debt Relief

Once you have a clear picture of your credit history, you can choose one of the six main approaches to debt relief to help you get out of debt. Each option has its advantages and drawbacks as well as a distinct impact on your credit score, both short term and long term.

Debt Relief OptionImmediate Credit ImpactLong-Term Credit Impact
Debt Snowballs and AvalanchesNoneReliably Positive
Debt ConsolidationSmall impact (positive or negative)Minimal
Credit CounselingNone expectedNone expected
Debt Management Plan (DMP)Moderate impact (positive or negative)Minimal
Debt Negotiation or Debt SettlementSevere damangeSlow recovery
BankruptcySevere damageSlow recovery

Debt Snowball and Debt Avalanche

  • Immediate credit impact: None
  • Long-term credit impact: Reliably positive

The debt snowball is when you pay off your debts one at a time, starting with the ones that have the lowest balance. This eliminates those debts from your credit record quickly.

The debt avalanche is when you pay off your debts one at a time, but you start with those that have the highest balances instead. While it takes longer to clear debt from your credit history, the debt you clear takes a larger chunk out of your overall balance owed.

As long as you stick to the minimum payments needed on all of your other credit accounts while you work to pay down your debt, this method has little immediate impact on your credit report and a reliably positive one in the long term.

Debt Consolidation

  • Immediate credit impact: Small (positive or negative)
  • Long-Term credit impact: Minimal

Debt consolidation loans and balance transfer credit cards can help you manage your debt by combining multiple lines of credit under one loan or credit card. While this helps by making one payment out of several, it’s not a strategy that directly gets you out of debt. It’s more like a tool to help you get out of debt faster and easier.

Consolidation loans often offer lower interest rates than the original credit lines, enabling you to pay off your debt faster. In addition, having one lower monthly payment makes it easier to avoid late or missed payments.

Balance transfer credit cards let you transfer debt from other cards for a minimal fee. These cards sometimes require that you pay off the balance transfer balance within a certain time frame to avoid incurring interest. If you choose a balance transfer card, choose one with terms favorable to your situation and needs.

A debt consolidation loan adds a new account to your credit report, which can briefly cause your score to drop. On the other hand, adding a loan or credit card to your credit history could improve your credit mix. You’ll need to consider these factors when determining whether a debt consolidation loan is right for you.

Credit Counseling

  • Immediate credit impact: None expected
  • Long-term credit impact: None expected

A credit counselor is a professional adviser who helps you manage and repay your debt. Counselors may offer free or low-cost consultations and educational materials. They often lead their clients to enroll in other debt relief programs, such as a debt management plan, which generally require a fee and can affect your credit. 

Be sure you fully understand the potential impact of any debt relief program suggested by a credit counselor before you sign up. Ask as many questions as you can, like “Will this debt relief program have high interest rates?”

Counselors can also help you avoid accumulating too much debt. Seeking advice from a counselor about a loan that you’re interested in can save you money in the long run. Learning how to choose a credit counselor who can meet your needs is essential.

Debt Management Plan

  • Immediate credit impact: Moderate (positive or negative)
  • Long-term credit impact: Minimal

A Debt Management Plan is typically set up by a credit counselor or counseling agency. You make one monthly payment to that agency, and the agency disburses that payment among your creditors. This debt management program can affect your credit in several ways—mostly positively.

While individual lenders may care that a credit counseling agency is repaying your accounts, FICO does not. Since FICO is the leading data analytics company responsible for calculating consumer credit risk, a DMP will not adversely affect your credit. Of course, delinquent payments and high balances will continue to bring your score down, even if you’re working with an agency.

When you agree to a DMP, you have to close your credit cards. This will likely lower your scores, but how much depends on how the rest of your credit report looks. Factors such as whether or not you have other open credit accounts that you pay on time will determine how much closing these lines of credit will hurt your score.

Regardless, the negative effect is temporary. Ultimately, the impact of making consistent on-time payments to your remaining credit accounts will raise your credit scores.

Debt Settlement and Debt Negotiation

  • Immediate credit impact: Severe damage
  • Long-Term credit impact: Slow recovery

Some creditors may allow you to settle your debt. Negotiating with creditors allows you to pay less than the full balance owed and close the account.

Creditors only do this for consumers with several delinquent payments on their credit report. However, creditors generally charge off debts once they hit the mark of being 180 days past due. Since charged-off debts are turned over to collection agencies, it is important to try to settle an account before it gets charged off.

Debt settlement companies negotiate with creditors on your behalf, but their tactics often require you to stop paying your bills entirely, which can have a severe negative impact on your credit. In general, debt settlement is considered a last resort, and many professionals recommend bankruptcy before debt settlement.


  • Immediate credit impact: Severe damage
  • Long-term credit impact: Slow recovery

Filing for bankruptcy will severely damage your credit and can stay on your credit report for as long as 10 years from the filing date. However, if you are truly in a place of debt from which all other debt relief programs cannot save you, bankruptcy may be the best option.

Moreover, working diligently to rebuild your credit after bankruptcy can help improve your credit scores. Depending upon which type of bankruptcy you file for—Chapter 7, Chapter 11 or Chapter 13—you will pay back different amounts of your debt, and it will take varying timelines before your credit can be restored.

Learning the difference between bankruptcy types can help you choose the right one. A qualified consumer bankruptcy attorney can help you evaluate your options.

Boost Your Personal Finance Knowledge With Credit.com

Whichever method of debt relief you choose, the ultimate goal is always to pay off your debt. That way, you can save and invest for your future goals. For some, taking a hit to their credit temporarily is worth it if it means finally getting their balances to zero.

Credit.com has an extensive library of personal finance resources that can enhance your knowledge and help you determine if a loan or line of credit is right for you. Plus, you’ll find plenty of resources to help with your debt relief goals.

The post Does Debt Relief Hurt Your Credit? appeared first on Credit.com.


Такер Карлсон уверен, что перед интервью с Путиным за ним следили спецслужбы США

Signs Someone Is Falling In Love With You

6 Tips & Tricks To Get Instant Respect

Ожидается, что строительство двух новых гостиничных комплексов позволит динамично развивать туристическую индустрию в регионе

7 Behaviors Covert Narcissist Do


Read also

Nevada’s Democrat Secretary of State Pulls a Fast One, Claims ‘Glitch’ That Caused Unmailed Nevada Ballots to Show Up as Counted in Recent Primary will be Fixed in 48 Hours

Easier trade with EU is ‘work in progress’, says PM to woo rural voters

How to Watch Scott Stallings at the Mexico Open at Vidanta: Live Stream, TV Channel, Odds

News, articles, comments, with a minute-by-minute update, now on Today24.pro

News Every Day

7 Behaviors Covert Narcissist Do

Today24.pro — latest news 24/7. You can add your news instantly now — here

News Every Day

6 Tips & Tricks To Get Instant Respect

Sports today

Новости тенниса

Синнер сместил Медведева с третьего места в рейтинге ATP

Спорт в России и мире

«Спартак» после 0:3 в начале матча забросил 7 безответных шайб в ворота «Торпедо»

All sports news today

Sports in Russia today


Анастасия Пивоварова стала амбассадором благотворительного фонда «Ветер добрых перемен»

Новости России

Game News

Мафия-НН: Друзья, давайте поговорим о чем-то интересном, что недавно произошло в нашем уютном городе Мафия-НН.



Собянин пообещал открыть в Москве 39 новых станций метро до 2030 года

Губернаторы России

Нижегородское «Торпедо» проиграло с крупным счетом «Спартаку»

Президент Венесуэлы Мадуро хочет посетить Москву после президентских выборов

В Мальжегарском наслеге Нюрбинского улуса открыли памятник братьям Донским

Боец UFC Фахретдинов пожаловался на дорогие квартиры в Саранске

Такер Карлсон уверен, что перед интервью с Путиным за ним следили спецслужбы США

Воронежцы с «Симфоническим Кино» вспомнят легендарные творения Цоя

«Лицо раздувает»: дерматолог шокирован происходящим с Анастасией Волочковой

Шапки женские вязаные на Wildberries, зима 2024 — новый цвет от 392 руб. (модель 466)

Джиган и Оксана Самойлова поделились стильной семейной фотосессией в честь дня рождения сына и трогательно поздравили именинника

Потапова вышла в 1/8 финала турнира WTA в Дубае

Калинская пробилась в основную сетку турнира в Дубае

Синнер сместил Медведева с третьего места в рейтинге ATP

Синнер после победы на турнире в Роттердаме обойдёт Медведева в рейтинге ATP

Шапки женские вязаные на Wildberries, зима 2024 — новый цвет от 392 руб. (модель 466)

Шапки женские зимние на Wildberries — скидки от 398 руб. (на новые оттенки)

Европопейская Армения 24 февраля митингует против России?

Евросоюз ест Ереван

Петиция по глиноземному заводу Русала выросла до федеральной

Алла Пугачева передумала продавать свою недвижимость в Москве

Шапки женские вязаные на Wildberries, зима 2024 — новый цвет от 392 руб. (модель 466)

Несогласованная агрессия ЕС против Азербайджана

«Маньячило еще тот». Самый «черный» риелтор Москвы Мурылев убил восьмерых

По обороту кафе и ресторанов Тульская область в ЦФО уступает только Москве, Подмосковью и Воронежу

Мадуро изъявил желание приехать в Москву этой весной

Ушел внезапно, неожиданно: Трагедия произошла в Москве

Путин в России и мире

Персональные новости Russian.city
Виктор Цой

Журналист Додолев сравнил поведение Цоя и Шевчука на гастролях во Франции

News Every Day

5 Reasons Eating Healthy is Making You Fatter

Friends of Today24

Музыкальные новости

Персональные новости