How to Improve a Credit Score After Debt Settlement

The credit improving and financial recovery process after debt settlement is much similar to recovering from some of your other major financial problems, such as bankruptcy, foreclosure or car repossession. And while improving your credit score at all three credit bureaus will require a little bit of your money, it will mostly require your time and effort, and time in general for records updates. Indeed, you can start your recovery process during debt settlement but leave your major work until after the fact so that you will not lose focus.

Instructions

1

Order your credit reports, if you do not qualify for the one free annual credit report, from each of the credit bureaus (Equifax, Experian, TransUnion) so that you can start doing some serious disputing. Find all creditors that show you are at least 30 days late, and compose a letter to each creditor that explains what happened during that time and ask for written forgiveness in the form of a never late on your credit reports.

2

Establish different lines of credit starting with a secured credit card that reports to all three credit bureaus. Secured credit cards will be funded 100 percent with your own money. If you want a $500 credit line, you will have to deposit that amount with the card issuer. This eliminates some of the financial risk that would normally fall upon a lender or creditor. Open no more than two new lines of credit.

3

Once you have established various lines or types of credit, keep the balances low on all new debt as well as other debt that may have not been taken care of by debt management. The balances should be from 10 percent to 30 percent of your balance.

4

Once those new lines of credit or credit not taken care of by debt management have started to report positive on your credit reports, pay all of the creditors on time and if possible before the due date.

5

Under normal circumstances, you would only order your credit reports maybe once a year. However, after doing a major cleanup, such as debt settlement, you want to order at least twice a year. A lot of creditors use sneaky tactics where they will reenter a balance as an example on your credit report whereas it should be zero balance or they will go back and report late when they agreed to a never late.