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HomeBlog Debt ReliefHow To Rebuild Your Credit After Debt Settlement
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How To Rebuild Your Credit After Debt Settlement

October 6, 2012 by National Debt Relief

Man and woman in their 20s facing stage rightWe’re not very unbiased when it comes to debt settlement as a way to reduce your debts because after all that’s our business. However, we do understand that debt settlement will have a negative affect on your credit report and credit score. The reason for this is because for settlement to work you must have stopped or been unable to make the payments on your unsecured debts for at least six months. And not making payments on your debt for this long will definitely lower your credit score.

Get new credit

This may sound counter intuitive – since you got in trouble with credit in the first place– but the first step is to get new credit. As you might guess, you will have a problem getting a major credit card such as a Visa card or MasterCard. However, you should be able to get a gas credit card or a department store card. Failing this, you could always get what’s called a “secured” credit card, which is where you deposit money on the card and can then use it anywhere that accepts standard credit cards until you reach a zero balance.

Before you deposit money on one of these secured cards, make sure that the company will report how you handle the card to the credit reporting bureaus. If not, this will do you no good in terms of improving your credit report or credit score.

Credit cards for people with bad credit

There are also credit cards designed specifically for people who have bad credit. However, these cards usually come with a very high interest rate as the lender is taking more of a risk with you. For example, Orchard Bank offers three different credit cards specifically for people who need to rebuild their credit. It also offers a secured card, which is not a bad deal, as it requires only a $200 minimum deposit. There is also the Horizon Gold Credit Card and the Applied Bank® Visa Card, which comes with an interest rate of 23.99% and $9.95 monthly fee.

Build new habits

You probably remember the old saying, “keep doing what you’re doing and you’ll keep getting what you’re getting.” If you truly want to rebuild your credit, you need to replace your old credit habits with better ones. If not, the odds are that you’ll end up right back where you were before debt settlement. You need to quit charging items you can’t afford or making just the minimum monthly payments on your credit cards. You need to make sure you don’t become delinquent on any account and this includes even little ones like school lunches, medical bills and library fines. The reason for this is because more and more businesses are using collection agencies. And if one of your accounts lands in a debt collector’s hands, it will go on your credit report and stay there for seven years. This would definitely ruin any progress you’ve made to date.

Create “good” credit

You need to make sure you practice your good credit habits, as your credit won’t improve until creditors see that you have done what’s required to get a good credit score. At the risk of being redundant, this means charging only what you can afford and paying all of your bills on time every month. Also, don’t take on too many credit cards during this rebuilding, as it can be hard to manage multiple balances and payments. You really need only one or two credit cards to get started.

Follow these tips

Some other things you should do as you rebuild your credit are minimize your outstanding debt and be sure to avoid doing too much. You will not want to apply for credit needlessly. Credit applications show up in your credit report, which alerts lenders to the fact that you may be taking on new debts. It’s better to use your existing credit to prove that you can manage credit responsibly.

How long will it take?

Unfortunately, the majority of negative information on your credit report will stay there for seven years. However, if you follow the advice you’ve read in this article, it’s possible that in two to three years you can get your credit score up into the high 600s. While this will be enough to get credit, it wouldn’t be enough to get the best credit offers. You will need a score of 760 to get the best interest rates.

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National Debt Relief
National Debt Relief

National Debt Relief is one of the largest and best-rated debt settlement companies in the country. In addition to providing excellent, 5-star services to our clients, we also focus on educating consumers across America on how to best manage their money. Our posts cover topics around personal finance, saving tips, and much more. We’ve served thousands of clients, settled over $1 billion in consumer debt, and our services have been featured on sites like NerdWallet, Mashable, HuffPost, and Glamour.

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By clicking "Get Free Quote", you agree that the phone number you are providing may be used to contact you by National Debt Relief (including autodialed and prerecorded calls, as well as text/SMS messages). Msg. and data rates apply, and your consent to such contact is not required for purchase.
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Moderate National Debt Relief Caller: Charlotte Transcribed WE 1/17/2021 Charlotte: I am calling because I wanted to ask a few quick questions about your experience with National Debt Relief [unclear 0:00:27]. JOSE: It’s good. Charlotte: Now before I begin, I have to let you know that our call is recorded. Can you tell me what actually made you decide to work with [unclear 0:00:40] National Debt Relief as opposed to other providers? JOSE: Good. Charlotte: What made you decide to work with National Debt Relief, as opposed to other debt relief companies? JOSE: Aside from your reviews, I’m guessing the success of the reviews. Charlotte: Tell me about the service and the program that National Debt Relief signed you up for? JOSE: I was able to collect all my debt into one chunk and then pay it off. Also was able to get settlements lower than what the balance was. Charlotte: How easy or difficult would you say the enrollment process was? JOSE: It was pretty simple. It wasn't difficult at all. Charlotte: Now is there anything about the process that you feel could have been improved? JOSE: Not at all. I think everything went smoothly. Charlotte: Perfect. Can you give me a little feedback on your experience with your negotiator? What did you think about your negotiator? JOSE: Negotiator was really firm and fair. Charlotte: Do you happen to remember the name of your negotiator by chance? JOSE: I do not, actually. Charlotte: Okay. Is there anything about that representative stood out [unclear 0:03:04] at all? JOSE: No, not at all. Charlotte: Perfect. How comfortable did you feel working with the negotiator through this process? JOSE: Very comfortable. Charlotte: Perfect. So if you had any questions or concerns, how did the negotiator work with you to resolve any questions or concerns that may have arisen? JOSE: At this point, I really didn't have any concerns at all. So, I mean, been doing a great job. Charlotte: Awesome. So if you were gonna rate your experience with National Debt Relief so far, on a scale of maybe one to five, and five would be that you would recommend to friends and one is you were pretty dissatisfied, how would you rate them? JOSE: Is 5 the highest? Charlotte: Yes, 5 is the very highest. JOSE: Okay. Then we’ll go with 5. Charlotte: Would it be okay if I posted your comments as a review on our public web site for National Debt Relief? JOSE: Yes. Charlotte: I will also send over a link so that you can have it as a record for yourself as well. And I have you at salvipride673@gmail.com. JOSE: Yes. Charlotte: How did National Debt Relief work with you as far as setting up a payment [unclear 0:04:45]? JOSE: They did pretty good. Like I said, I have no complaints at the moment. Charlotte: How comfortable were you with the amount that you were paying? JOSE: Very comfortable. Charlotte: Perfect. Now as far as your thoughts on the cost in relation to the quality of service you received at National Debt Relief, what would you say about that? JOSE: The service team was all right. Charlotte: Now if you were going to rate your experience on a one to five, five is that you would recommend to friends and one is you're pretty dissatisfied, how would you rate them? JOSE: 5. Charlotte: Perfect. Would it be okay if I posted a few of your comments to our website? JOSE: Yes. Charlotte: Now if a friend or a family member were asking you about National Debt Relief, what would you say? JOSE: Really great people to work with. Very quick and easy, very responsive, no issues. Really makes you feel like they’re there for you. So not a scam at all. Charlotte: Perfect. Now about where are you in the process at this point? JOSE: I've already had two creditors resolved already. Pretty happy about that. Charlotte: And of course, our call is recorded.

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