What happend to the credit rating

August 31st, 2012 by Questions

I see the benefits of debt settlement. But I am wondering what happens to your credit rating for the time one desides to go into dept settlement and the time the company starts to make contact with your debtors to settle the accounts?

Posted from: Ontario


One Response to “What happend to the credit rating”

, A licensed trustee said:

Be VERY careful before you commit to a debt settlement program. Most of these companies have VERY poor results – fewer than 5% of the people that start a debt settlement actually complete the program and have their debts dealt with. Most end up being sued and then turn to filing a consumer proposal or bankruptcy (but only aftre they’ve paid the settlement compnay for months…).

To answer your question, every month you “miss” the regularly required payment your credit rating will drop a notch. For example, if you make all of yoru payments every month your rated a 1, pay a month late and you become a 2, two months late and you become a 3… This continues until 6. A ratig of 7 is used for peole that file a debt management program or a consumer proposal. 8 is used if an asset is repossessed and 9 is used if a debt is written off, assigned to legal or collections, or if you file for bankruptcy. You should go to either Equifax or Trans Union’s websites to read more about credit reporting.

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