Does credit counseling hurt my credit score?

This is a very popular question we receive regarding your credit score. Its important to know how your credit score is calculated to explain this answer in detail so let’s dig in.

• 35% of your credit score is measured by making payments on time
• 30% of your credit score is measured by your dti (debt to income) – the more debt you have the lower your score

The rest of your credit score is measured by how many accounts you have open, how long they have been open, and other factors.  According to MyFico.com, credit counseling does not hurt your credit score. debt management programs have an enrollment fee and its important to know that the first payment does not go toward your creditors. Its not until the second payment drafts out that the funds are distributors to your creditors as it typically takes 30 days to set everything up for your lower interest rate, which takes anywhere from 1 to 3 months of payments on time before it kicks in, depending upon the creditor.

debt settlement on the other hand does not make payments regularly to your creditors, but rather makes payment into a settlement account where a lump sum grows.  The lump sum allows  the law firm or yourself to have better negotiating power to offer a settlement amount.  Creditors can sue you if they like but its costly for them and counterproductive. You can also owe a tax liability for the amount of money you did not have to pay. If your tax rate is 15%, $5,000 of forgiven debt will carry a $750 tax liability. However, you can petition  a waiver from the liability if your assets are lower than your liabilities by filling out form 932

To find out more about the pros and cons of debt management and settlement services, visit <a href="http://www.debtmanagementguys.com”>debt Management Guys .com to speak to a live representative by clicking the Call me button, entering your phone number and hitting connect. Or you can simply fill out the form to request more information, or by simply dialing 678.561.debt today. You have nothing to lose and only options to gain.