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How to improve your credit score after debt settlement
Debt settlement programs can offer substantial savings on high-interest debt. These services employ experts who negotiate your balances with credit card companies and others you owe money to in an attempt to settle your debt for less than you owe.
But the downside is that when you take this path, these programs may have a negative impact on your credit score. For starters, the debt settlement process typically requires you to make monthly payments to the debt settlement company rather than your creditors, which results in late and delinquent payments on your credit report. And, after the debt is settled, it’s typically listed as settled rather than paid in full on your credit report.
But, if you’ve made it through a debt settlement program, what are the steps you can take to improve your credit score? Here’s what you should know.
Get in touch with a credit repair professional now.
How to improve your credit score after debt settlement
Here are a few things you can do to improve your credit quickly after you’ve completed the debt settlement process:
Get in touch with a reputable credit repair expert
Credit repair companies generally employ experts with deep knowledge regarding the rules of credit reporting. These companies may be able to dispute incorrect items on your credit report and have them removed in certain cases. They may also offer guidance on how to properly use credit to improve your score over time.
Find out how easy it can be to improve your credit score today.
Get a secured credit card
Secured credit cards can also offer you a way to establish a positive credit history after debt settlement.
“You can get your credit rolling again with a secured credit card,” says Dawn-Marie Joseph, founder of Estate Planning & Preservation, a firm that helps consumers with financial and estate planning needs. “Many banks and financial institutions will offer these types of credit cards.”
“Secured credit cards require a refundable security deposit, which serves as your credit limit,” says Michael Broughton, founder and CEO of the credit-building app, ALTRO. “By using the card responsibly – keeping your spending in check and making payments on time – you can demonstrate to lenders that you’re creditworthy, gradually improving your credit score.”
And, if you show responsible use of the credit card account for long enough, you may be offered the opportunity to upgrade it over time.
“Additionally, many card issuers offer options to upgrade from a secured credit card to an unsecured one with a higher limit, providing even more credit opportunities,” says Broughton.
Maintain a good credit utilization ratio
When you use your new secured credit card (or any other line of credit you may have access to), it’s important to pay close attention to how your balance relates to your credit limit. The amount of credit you’re using compared to your credit limit is known as your credit utilization ratio, and it can have a meaningful impact on your credit score.
According to Equifax, lenders typically prefer that you keep your credit utilization ratio at or below 30%. This means that you should only use about 30% of your credit limit at any given time.
For example, let’s say you have a $1,000 credit limit on your secured credit card. About 30% of that limit would be $300, so you should consider that credit card maxed out once you spend $300 on it. Having a balance that’s higher than 30% of your credit utilization may negatively impact your credit score.
Pay your bills on time
Ultimately, you’ll need to consistently pay your bills on time to earn a good credit score.
“Always remember to continue paying your bills on time,” says Joseph.
And, that includes more than your new secured credit card. You should pay all of your bills on time. After all, if you let a bill fall too far behind, it may be reported to the credit bureaus as past due. And, delinquent accounts are the last thing you want on your credit report when you’re rebuilding your credit after debt settlement.
The bottom line
Debt settlement can damage your credit score, but you can begin to rebuild your credit by following a few simple steps. You may want to start by reaching out to a reputable credit repair service. Getting a secured credit card and keeping your balance to 30% of your credit limit or less may also help. And, if you have any other credit lines, be sure to only use, at maximum, about 30% of the available credit on those, too. That way, you can start your credit rebuilding journey off right — and then continue to build good credit over time by paying all your bills on time.
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McDonald’s investing $100 million to lure customers back to the fast food giant after E. coli outbreak
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The investments include $65 million that will go directly to the hardest-hit franchises, the company said.
The U.S. Centers for Disease Control and Prevention has said that slivered onions on the Quarter Pounders were the likely source of the E. coli. Taylor Farms in California recalled onions potentially linked to the outbreak.
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Quarter Pounders were removed from menus in several states in the early days of the outbreak.
In a statement Wednesday obtained by CBS News, McDonald’s said it had found an “alternate supplier” for the approximately 900 restaurants that had temporarily stopped serving Quarter Pounders with slivered onions.
“Over the past week, these restaurants resumed the sale of Quarter Pounder burgers with slivered onions,” McDonald’s said.
CBS News reached out to McDonald’s on Saturday for a statement regarding the reported investment.
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