Does National Debt Relief Affect Your Credit Score

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There are instances when loan borrower is unable to make payments for their loan on time, or even at all. Many borrowers opt to apply for National Debt Relief in order to avoid unwanted situation, such as foreclosures in mortgage loans. But does National Debt Relief affect your credit score? Yes, it does. There are two mechanisms of how debt relief will influence credit score of borrower. You can choose one option that is more proper to your situation.

How National Debt Relief Affects Credit Score?

This debt settlement company helps customer negotiating the loan terms with lender. It assists customer in getting loan program that is more suitable to them so they will not need to bail out from their loan. There are two options of debt relief that borrower can choose from. The first option is declaring bankruptcy while another one is debt settlement.

Bankruptcy is a legal state that involves court and law. If you are declaring bankruptcy, the assets that you own are going to be divided between all of your loan lenders. A trusted third party will be appointed by the court to conduct that task. Bankruptcy is actually not recommended except if you are under urgency. The reason is bankruptcy will be present in your credit report for the next seven years or even longer.

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How does National Debt Relief affect your credit score if you are declaring bankruptcy? This company actually focuses more on the second method, debt settlement, not bankruptcy. It is because credit score is going to be deeply affected by this method. The higher your original credit score, there is a big chance that your credit score will take deeper plunge. If you originally have credit score of 845, after bankruptcy it may reduce to 650. While if you originally have 550, it may decrease to 450 after bankruptcy.

Debt settlement is a recommended method by this company. It has less severe effect compared to bankruptcy. It is a process in which borrower attempts to negotiate reduce of loan balance with lender by offering them lump sum payment, usually with the help of debt settlement company. Debt settlement is a completely legal activity. It will not taint your public record and affect aspects of your life in the future (e.g.: employability and future credits) as much as bankruptcy.

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How does National Debt Relief affect your credit score if you decide on debt settlement? Well, your credit score will experience a down turn after taking debt settlement route. However, the plunge is not as extreme as bankruptcy. Decrease in credit score usually is 50% less than if you are declaring bankruptcy. Debt settlement also influences your credit score in shorter period, only for two to four years. Even during that time, your debt might be concluded. This method usually works only for unsecured debt, not debt that involves collateral.

Hopefully after learning between two options of debt relief you can make sound decision with lesser risk and higher gain, according to your situation. Knowing ‘how does National Debt Relief affect your credit score’ will help you planning financial life better.