Working on the credit score is important to avail of better terms in future credit and loan applications
Dallas, TX (PRWEB) June 19, 2014
Debt Consolidation USA recently shared in an article published last June 16, 2014 the steps to take after successfully settling debt with a creditor. The article titled “4 Items On Your To-Do List After Debt Settlement” discusses debt settlement as well and how most people in the past were victimized with unscrupulous companies that are pretending to be legitimate organizations.
Debt settlement is when a creditor agrees to a lower settlement amount on an existing consumer loan. The creditor forgives a large chunk of the amount owed by a borrower and agrees to a payment lower than what is due. The amount to be forgiven does not have a set industry formula and depends on how a debt settlement company can negotiate on the behalf of the borrower.
After a successful settlement of debt, the article explains that getting a lender-signed settlement document is of paramount importance. It will be a legal document that will prove that a borrower has reached a settlement amount with a lender and has paid the debt in full. This is also to prevent what experts refer to as zombie debt where shady organizations are able to get hold of undocumented settled debt and collects again from the same borrower.
Another item is bargaining with a lender that the records reflect paid off and not settled. The debt settlement company can include this in the negotiation stage. Accomplishing this will allow future lenders to see that a consumer was able to pay off the debt. This will have a softer effect the credit score as against showing a settled mark on past debts.
The article also shares that borrowers who took on debt settlement has had some form of financial hardship which would show on the credit score. Working on the credit score is important to avail of better terms in future credit and loan applications. It would be best to make payments on time on existing debt to improve the credit score.
The budget would also need some hard work. The article explains that after a borrower settles a debt with a lender, it is beneficial to take a close hard look at the monthly budget. There might be issues with the income coming in or expenses getting out of hand that led to debt payment problems in the first place. The objective of this exercise is to prevent the need to settle with another creditor in the future.
To read the rest of the article, click on this link: http://www.debtconsolidationusa.com.