New lending statistics reveal that millions of Americans across the country have combined credit card debt of more than $807 billion — but even though a settlement program could rescue them from debt, they won’t pursue one because of fear mongering about harm to their credit scores.
The truth? Claims about how debt settlement can permanently ruin your FICO score are unfounded, says Bradley Smith, founder of debt relief company Rescue One Financial. His company has many tips for how to rebuild credit scores no matter someone’s current situation.
“If you’re struggling with huge credit card tabs then your score is probably already suffering. And even if you see your score temporarily dip down slightly at the beginning of a debt settlement program, it’s easy and straightforward to start rebuilding that number,” says Smith. This temporary dip is the cause of a strategy commonly used to negotiate with creditors into providing better terms and payoff amounts to Rescue One Financial’s clients.
In order to create financial stability, an effective debt settlement program needs to accomplish two things: 1) eliminate the debt; 2) facilitate the credit restoration process for clients. This prepares people for a “new start” in life, once their debt is paid off. Rescue One Financial’s program is a case study that accomplishes these two things.
It’s even simpler to develop a strong credit score after completing a debt settlement program because you’ll be free of the thousands of dollars in debt that were hurting your score, your wallet, and your overall wellbeing long before you even considered a settlement.
Some of Smith’s top tips for rebuilding a credit score include:
- There are credit cards specifically to help people rebuild credit: secured credit cards. The only difference is that you need a deposit to start using secured credit cards, but your payments are still reported to the credit bureaus.
- Keep an eye on your credit report: Once you have settled and paid off your debt, pay close attention to your credit score to make sure resolved debts are lifted. Once your delinquent accounts disappear from your credit score, it should increase.
- Apply for new types of credit: You must avoid getting back into major debt following a settlement, but applying for some new types of credit – such as cards with low limits or small personal unsecured loans – is one way to add points to your credit score
Smith has 18 years of experience in the financial industry, where he started on Wall Street, and he applies that knowledge in overseeing the operations of Rescue One Financial, a company with the mission to help people overcome the stress and burden of debt. The company is based in Irvine, California, and has more than 180 financial consultants that have to date helped more than half a million people finally manage and get relief from the years-long stress of debt.
Rescue One Financial has won rave reviews for its highly personal and compassionate approach to working with clients, offering them all the knowledge and support they need to secure a workable debt elimination plan and learn about financial literacy for the future.
A settlement doesn’t eliminate debt; instead, Smith’s professionals work quickly with someone’s creditors to negotiate a specific amount to pay off that is lower than the current level of debt. Once the money’s paid, the debt is considered settled. The approach often requires people to stop making their monthly credit card payments, which can ding their credit scores.
But Smith says this fact alone has sadly prevented millions of people from reaping the benefits of a debt relief program because credit scores can always recover once the debt is gone.
“Yes, your credit score will suffer upfront,” he says. “But debt settlement is often what people need to escape from their debt, and any credit score impact is a minimal part of the process that is completely restorable, and we help our clients navigate how to rebuild their score.”