Most of us when we are paying off our debts tend to focus on the old ones first. This makes sense in our mind because we are catching up and eliminating debts that have been plaguing us for years. It seems to make sense to start with the old ones and work our way up to the newer ones. But since the last 18 to 24 months is more important to a lender, you might want to actually focus on paying off those debts first to improve your credit score. Also your more current debts can affect you for the next 7 years so starting with them is a good way to go. Obviously don’t completely neglect old debts, just start with the more recent ones and work your way back. You are still responsible for any older debts you have created and the more you can get paid off, the more you will see your credit score improving.
How to Settle Your Debts
If you would like to settle your debts with your creditors this is a possibility, though you have to be willing to work at it. Most creditors do not want to take a loss unless they have to. If you play up the settlement process in the right manner you will find that settling is much easier than you had ever thought. To make the process a successful one you must first get the creditor to make a deal with you on the amount and then you have to get them to change your credit rating. This is possible, though it will take a bit of work.
Tips to Succeed with Debt Settlement
1. The first step is to always contact the creditor by mail. This is a good idea because it will put you in control of the situation as they will then have to contact you to make the settlement happen. The company will end up coming to you to settle because you have the money that they want.
2. Don’t ever come across as overly eager to settle with the creditor. If you come across as too eager you will lose that control that you had when you contacted the creditor. It’s important not to let on why you want to settle the debt (such as you are buying a new home or trying to buy a car). When you give too much information you lose the all important control.
3. When you have come to an agreement on the settlement amount, then start working on having them change your credit rating. This is a difficult part of the equation but is also one of the most important parts because the key is to improve your credit standing, taking back your buying power. You should get a written letter before you pay the settlement that says you have “paid as agreed” because anything less than this is a blemish on your credit report. When the creditor puts it in writing and you have it, you can then pay the settlement amount.
As you can see, settling your account can really work in your favor. When you settle the account you pay less than is actually owed, so you clear the debt from your past and you also ensure that you have a good credit rating, which will help you when you are trying to get credit in the future.