Settling Debts and your Credit Report

          Settling Debts is a good goal when attempting to improve your credit. However there are a few points that one should be rehearsed in before embarking on this ambition. A word of wisdom regarding settling a debt with a creditor or collections company would be that just because you have come to some sort of agreement on the amount you can actually pay them, thus settling your debt with them your credit report will still show disparaging information on that account. In order to remedy this situation you need to achieve two objectives. You must not only get your lender to make an agreement you can settle on, but also for them to reach a deal on not adding a negative item to your credit report. While this may sound difficult, with a little know how, it can be achieved.
          In any case where you do not have enough money to actually pay back your collector/creditor they are often willing to settle on an amount that you can pay back. The reasoning is simple, if they can get dimes on the dollar, it is better than getting nothing at all. There are even debt settlement companies that are well rehearsed in this practice and can often get you a far better settlement deal than you could yourself. But if you want to learn some of the basics, here you go.
          When ever anyone is in debt settlement negotiations remember that you, the debtor have the inherent advantage. You have something the lender wants from you. The first rule is do not seem overly excited to quickly settle, which means to not go with the first offer they send your way. Despite the amount you actually owe them you will want to pay only what is comfortable for you. Many people have ended up only having to pay a dime on each dollar in order to permanently settle their outstanding debt. Now this may not be the case for everyone and even if you can settle for half of your original debt that is considered to be fairly good.
          During negotiations, creditors / collection companies tend to come on strong and refuse to give much. This ends up making their first and often second offer pretty much unacceptable since you can most likely get a better deal if you too seem stubborn. During any negotiations, always remain relaxed and make them believe that if they cannot obtain something at least from you that they will probably end up getting nothing at all. Also, keep in mind that the older any account is, the easier it tends to be with finding middle ground.
          Here are some key factors to making a great settlement. When you first contact your lender do so with a hand written letter. The reason behind this is that they will then end up calling you in order to settle the debt. This gives you the advantage in that they are now coming to you to settle the account. As stated before, never sound too willing or excited to settle your account, if you do this, they will notice it and the bargaining will be in their favor. Never disclose any information as to why you want it settled either, do not provide information they do not need. During negotiations, try to get them down to about half of what you owe, then tell them you need a day or so to think about it and arrange a time for them to call you back the next day. Once an amount is agreed on for repayment, is when you add on that you don't want your credit rating damaged during this. Having a collection paid on your credit report is a negative but having an account settled looks even worse. It red flags future creditors that you are liable to do this to them as well. Then, in order to ensure that your credit report is not negatively influenced, get them to send you a letter affirming that your account will be reported as Paid as Agreed. This is important because paying off your collector / creditor will do nothing to help build your credit unless you get a favorable note on your credit report.