Rebuild Credit After Debt Settlement - Heston Law Firm (2024)

If you have a large amount of debt that you can’t pay off, debt settlement is one solution to help you get back to normal and prevent issues like bankruptcy and debt lawsuits. In many cases, your debt settlement lawyer can help you reduce your debt significantly so it’s easier to pay off. We regularly help our clients reduce credit card debt by 60% to 80% so they can save money and pay off debts to prevent them from causing continuous stress.

While settling debt can affect your credit score, keep in mind it’s often much better for your credit report than having an account in default, filing for bankruptcy, or having a debt lawsuit judgment against you. After our debt lawyers help you settle your debts so they’re easier to pay off, you can start rebuilding your credit and close this difficult chapter of your life.

Get in touch with our team today for a free consultation if you have unmanageable debt.

How Does Debt Lawsuit Settlement Affect Your Credit?

When you have debt that is overwhelming that you can’t pay off, debt settlement is an option to help you get back on track and start your road to financial recovery. Debt settlement will affect your credit, usually lowering it in some way. This is because you’re paying off the debt for less than you borrowed.

However, it’s often much better for your credit score than things like bankruptcy, not paying your bills, or losing a debt lawsuit. So, if you’re struggling to pay your credit card bills, medical bills, or loans, then it may be better for your credit in the long run to work with a debt resolution lawyer. Your attorney can negotiate with the collector to create a settlement agreement for a discount on what you owe. This way, the debt is much more manageable and you can pay it off and start rebuilding your credit.

Strategies for Rebuilding Your Credit After Settling a Debt Lawsuit

Debt settlements can stay on your credit report for up to seven years, but that doesn’t mean they have to. In fact, with the right steps and strategies, you can improve your credit after settling debts within 6 to 24 months. Here are some steps to take:

1. Monitor Your Credit: Make sure that things are reported correctly. If they’re not, dispute it with the credit reporting agency or request a correction from the debt collector.
2. Pay Your Bills On Time: Timely payments are a huge part of your credit score from all three of the large credit reporting agencies: Equifax, TransUnion, and Experion. After your debt attorney helps you settle the unmanageable debt, make sure you pay your bills on time and in full if possible.
3. Don’t Use Too Much Credit: Your credit score also depends on credit utilization, meaning how much credit you actually use versus what’s available. Try to use less than 30% of your available credit to help rebuild your credit score after a debt settlement
4. Become an Authorized User for Someone Else: If you have someone close to you that you trust who has a good credit score, see if you can become an authorized user on one of their accounts, which can help give you a boost on your own credit report.
5. Open a New Account if the Settlement Closed Most of Them: Good credit scores rely on having credit accounts and using them responsibly. If your debt settlement agreement closed most or all of your accounts, then consider opening one or two that you can easily manage moving forward.

Get Advice from a Debt Settlement Lawyer in Texas

If you have a huge amount of debt that is bringing your credit down or even getting you into legal trouble through debt lawsuits, contact our team today. Our professionals at Heston Law Firm are experienced debt settlement lawyers and can help you resolve your debts. Our team fights for you so you can get out of debt and start fresh.

Contact us now for a free consultation to learn how our debt attorneys can help.