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Credit Report News, Tips & Advice « Credit Reports > Credit Report Tips > Debt Settlement, Debt Utilization, and your Credit Score

Debt Settlement, Debt Utilization, and your Credit Score

By Karen Anderson
Published: Tuesday, December 29th, 2009

Everything is at its best if it is in the right amount and proportions, nothing more, nothing less. In the businesses of credits, debts and payments the same truth applies, everything should be just right. This is the same nature that puts credit experts in an obligated position to give the best credit report tips. These tips would cater individuals to further understand the nature of credits and in answering the questions that continually bug the minds of individuals with the hassles of misunderstanding settling and utilization.

These two terms cause a lot of problems by decreasing the credit scores and even by worsening the credit report of the individual. On the brighter side of things, understanding these terms and their implications will dramatically increase the chances against the possible unfortunate situations in credit worthiness evaluation. Luckily, throughout the years, the credit repair firms are able to establish good credit report tips that can guide individuals against these unnecessary hassles.

Most of indebted individuals believe that when a debt is settled, everything is ok. This is a misunderstanding that most probably will cause future detriments to both of the individual’s credit reports and credit scores. The term settling as advised by the best credit repair firms that also gives the best credit report tips will alert the individual who entered in a debt settlement with the possible implications of the settlement agreement.

Settling the debt does not free the individual from the obligation to pay the debt he owed to financing entities. The manner of entering in a settlement means that the financing company settled for less than the borrowed amount of money simply because of the incapability of the borrower to pay the amount. Settling immediately this credit balances is one of the best credit report tips that any money borrower can have.

Settling debts will not only affect the credit worthiness of an individual in only one way which is through decreasing scores and worsening credit reports. Settling debts and not fully paying it will also increase the utilized part of an individual’s credits. Utilization based on the most reliable credit report tips is a negative measurement that will show the way an individual used his or her credit limits. The higher the utilization measurement of an individual, it is most probable that his or her credit score is lower as compared to those with the same record but with lower utilization level of measurement.

Sometimes these two hassling credit concepts even intersect with each other as seen in the worst cases of credit cards. Credit card users who tend and choose to do not pay their bills on time are making their credit worthiness status worse by making their debts utilized and utilized. The inability to fully and timely pay their credit card bills will force them to enter into a settlement that will also make their utilized measurement higher when they make other credits.

Credit report tips would only advise immediate payment and decrease in credit usage, in the presence of this event. If these tips are not followed, the unpaid credit card will appear for the next seven annual credit reports of the individual and his or her credit score will decrease because of the high utilization.

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