Intentional late payments for debt settlement will damage credit scores


Dear Experian,

I am considering signing up with a debt settlement company. They told me that in order for them to negotiate the best deal with my creditors I must refrain from paying my bills for more than 90 days. Won’t this negatively affect my scores?



Dear TND,

Yes, not paying your bills for that length of time will seriously impact your credit scores. Missing just one payment on an account will likely have a negative effect on your scores. Allowing multiple accounts to become 90 days or more past due will cause your scores to suffer substantially.

No reputable credit counseling or debt management company would encourage you to intentionally stop making payments on accounts to leverage a payment plan if you have the financial resources to make the payments.

If you are truly in a financial crisis and need assistance, seek an accredited credit counseling service that can help you build a budget and establish a debt management plan that works within that budget. If you enter into a debt management plan, make sure all of your payments will go to your creditors and will be make on time. Less than reputable companies sometimes keep your first check as payment for their services instead of sending it to your creditors, adding a delinquency to your credit history.

Many people do not realize that when a debt management service is making payments on their behalf, missed or late payments made by the company are still your responsibility, even if you were not aware the payments were not made on time.

Asking for help is the first step in regaining control of your personal finances. Just be cautious about the help that is offered. If you are asked for payment up front, are told to stop paying all of your debts, or the service does not include budget counseling and personal finance education, consider going to someone else.

Thanks for asking.

The “Ask Experian” team

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