How to clean up report after settlement

[toddb]

Hi All

Is it possible to cleanup a credit report post debt settlement other than waiting 7 years for stuff to just drop off?

I am still paying down debt via NDR and it's a slow going process even at 50-60% of whats owed.  Going this route destroyed my 780 score. Not only do I have a bunch of late payments, no payments, charge off's, I'm now seeing Settled-less than full balance entries that are keeping my score low.  This is like a STD that just won't go away, you sign up for help you get penalized, you pay off the debt you get penalized again.  when will this madness end?

[JoeRockhead]

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@toddb wrote:

Hi All

Is it possible to cleanup a credit report post debt settlement other than waiting 7 years for stuff to just drop off?

I am still paying down debt via NDR and it's a slow going process even at 50-60% of whats owed.  Going this route destroyed my 780 score. Not only do I have a bunch of late payments, no payments, charge off's, I'm now seeing Settled-less than full balance entries that are keeping my score low.  This is like a STD that just won't go away, you sign up for help you get penalized, you pay off the debt you get penalized again.  when will this madness end?

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The notations such as "settled for less" have no bearing on your scores.  Your scores are low because of the adverse reporting of late payments, charge offs, and collections (if any collections).  The only benefits to your scores is when all the accounts reach a zero balance and stop reporting monthly.  Until then, any revolving credit card balances are also hurting your aggregate utilization. 

Once the accounts are settled to zero, they'll also stop reporting the charge off status monthly, and your scores will start to recover.  But, your scores won't fully recover until ALL of the charge off accounts fall off your reports. 

Disputing accurate information often has undesired consequences. If the reporting has gone dormant, or they stop reporting a charge off monthly because it was paid/settled, and it later gets disputed... when it gets verified it will appear as a recent event and there will be a subsequent score ding.  The only hope would be to ask the original lenders for goodwill deletions, but those are very rare.  

[toddb]

thanks for the info.

[Realist]

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@toddb wrote:

Hi All

Is it possible to cleanup a credit report post debt settlement other than waiting 7 years for stuff to just drop off?

I am still paying down debt via NDR and it's a slow going process even at 50-60% of whats owed.  Going this route destroyed my 780 score. Not only do I have a bunch of late payments, no payments, charge off's, I'm now seeing Settled-less than full balance entries that are keeping my score low.  This is like a STD that just won't go away, you sign up for help you get penalized, you pay off the debt you get penalized again.  when will this madness end?

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I've provided a few posts about how this process works in detail.  I'll try to relay some of it here, but you may want to search to see if you can find these for more detail.  Debt relief is only that.  Some relief.  It's not the entire solution.  The only one that has the most interest in your situation, is you.  

You will find that the very first step is that they will negotiate with lenders to reduce interest rates.  This doesn't really do much, but the lenders agree because they would rather receive something, than nothing.  Then you will be advised to miss payments on certain accounts to accumulate money, to "settle" debts one account at a time.  This works great, until one of them says, "nope, we only discuss options with the owner of the debt".  So, you negotiate a settlement with the debt holder, and makes you wonder why you're even paying a debt relief company anyways.    Once you do this once, you might stop doing business with the debt relief company, and handle everything on your own.

The power of this process is to get through it as quickly as possible.  To get the damage as minimized as possible, and to find equalibrium as quickly as possible.  So long as they're reporting, you are taking a hit.  So long as debts are getting settled, your score will rebound, because the weight of the debt is being extinquished.  This counter balances the negative remarks depending on the weight of debt.  The weight of each positive debt elimination versus each negative remark, is weighted about the same.

At the end of the day, elimation of debt in the form of settled, will often kick you into mid to higher 600's, to low 700's, even with all the negatives on your report still showing.  This isn't an ideal scenario, but you will find lending starting to open up to you the further you move away from these settled events.  In seven years, they drop off.   Ideally, you want to clear out the debt as quickly as reasonably possible, so you can get on the road to recovery.  In seven years, you might be sitting at a 780+ and possibly 800+ if you continue to practice sound credit strategies.  

Lastly, anything you settle, will become taxed as regular income.