Like with shoe sizes — “One size doesn’t fit all”; with debt relief programs — “One debt relief service will never be the solution for all debt problems.” 

Depending on your credit score, credit utilization ratio, payment history – and don’t forget goals! – These different factors will determine what debt relief program is best for you. If you have a high credit score — a debt consolidation loan could be your best option; if you are behind on your monthly payments — a debt settlement or debt validation program could be a better fit for you.

In general, all debt relief programs are designed to;

  • Either reduce your interest rates (debt consolidation); or reduce your balances (debt settlement), ultimately saving you hundreds’ and sometimes thousands’ of dollars within a short period.
  • Make life easier by consolidating monthly payments into one. 
  • Give you a date for when you will be debt-free. Debt consolidation, debt validation, and debt settlement programs all allow you to see the light at the end of the tunnel — knowing when you will be debt-free.

Speak to a Certified Debt Relief Counselor at 866-376-9846, where all of your questions can be answered in detail.

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How does a debt relief program affect your credit?

When a person gets surgery to fix an injury, is the result always the same? Of course not. Some people still have pain, while other patients are 100% healed. 

The same goes for debt relief programs. Results will vary, but the goal is to improve a person’s overall financial health and to fix the serious problem which is – “their debt”. 

How a debt relief program affects credit, depends on;

A. what a person is doing outside of the debt relief program

B. the debt relief company’s level of performance

C. how the client’s situation was at the time they joined the debt relief program

D. what type of debt relief program a person joins

Some debt relief programs will affect a person’s credit score more than others. Look at this image.

How do debt relief programs affect a person's credit?

The image is illustrating how debt relief programs affect credit scores.

With a debt settlement program, a person may see a decline in their credit score because they must first fall behind on their monthly payments, for the program to work, as you will learn about below. 

The good news is;– as a person’s debt is “paid off” on a debt settlement program (one debt at a time), their debt-to-income (DTI) ratio improves (a positive factor). 

With debt consolidation, a person may see an improvement in their credit score. Remember with a debt consolidation loan; all debt will get paid off “in full” within 90-days, improving a person’s credit utilization ratio — resulting in an increase in their credit score.

Consumer credit counseling programs can freeze a person’s ability to use credit, but not necessarily lower their score. A third-party notation goes on a person’s credit report illustrating that they are on a consumer credit counseling program. When future lenders see this notation on a person’s credit report, it can be a disadvantage, because lenders look down upon these marks. 

With a debt validation program, a person’s debt is being disputed. If the debt collection company can’t validate the debt with all of the legally required documentation and accurate information, they can no longer collect on it or report it to the credit bureaus. 

Debt validation can help a person to dispute and remove a debt collection account from their credit report. 

Here is a debt with a balance of $15,874.88 that was resolved with debt validation — SEE example letter from a client…

debt validation to get rid of debt, and improve a person's credit report.

Balance – $15,874.88: — Creditor agrees to STOP collection on this debt and remove it from their credit report. 


What can you do to improve your credit while on a debt relief program?

Leave a credit card out of the program. Use that credit card every month and pay the balance “in full” every month, while your other debts get resolved in the program. This action will help to raise your credit score while on a debt relief program, or at the very least, help to raise your credit score faster after the program is completed. 

What is a debt validation program and how does it work?

A debt validation program is a debt relief program that includes credit repair and a money back guarantee.

With a debt validation program, you will get set up with a single monthly payment. Since you are not paying your debt back, and only responsible for paying a fee for the program, your program monthly payment will be much smaller than what you would be paying on your own when paying minimum payments and it would be smaller than your monthly payment on any other program. You get a “100% money back guarantee” when signing up for a debt validation program;– so let’s say one of your debts doesn’t get invalidated, or in other words, you end up having to pay one of your debts back “in full” or through a debt settlement, — you will be fully refunded for any money you paid to the debt validation company. 

Try this debt calculator to compare your monthly payment options with debt settlement, consumer credit counseling and debt validation, and see how much you can save with each program.

How does a debt consolidation loan work?

Debt consolidation loans and how they affect credit scores. See answers at

A debt consolidation loan can be obtained at the bank, a third-party loan company like Lending Club, or borrowed from a friend, co-worker, or family member.

When you get a debt consolidation loan you are borrowing money and using it to pay-off all of your debt. The point of getting a debt consolidation loan is to lower your interest rates so that you can get out of debt faster and save money. A debt consolidation loan, generally won’t hurt your credit score, and can actually help your credit score to improve. Keep in mind, when trying to get a debt consolidation loan, the bank and different lenders, will “run your credit” each time you apply, putting a negative credit inquiry on your credit report. Credit inquiries hurt your credit score. 

Just make sure you are a good candidate for a debt consolidation loan before you start applying everywhere. If you apply in multiple places for a debt consolidation loan and get rejected for the loan several times, now you just took a beating on your credit score for no reason. If you get rejected more than one time, stop, and analyze your situation before going any further.

Give a counselor at Golden Financial Services a call at 1-866-376-9846 to discuss your debt relief options. (You can get a Free Credit Report  & Score!)

How can a debt consolidation loan raise my credit score?

After you get a debt consolidation loan and use it to pay off other debts, your credit score will go up. You are paying off possibly five or more debts, at once. Your credit utilization and debt-to-income ratio will improve, and your credit score should go up within 30-60 days after paying off all of your other debts with the new loan. If you pay down the balance on any one particular debt showing up on your credit report, your credit score will almost always improve, so if you pay off multiple debts at once — just imagine the positive effect this action will have on your credit scores. 

When is a debt consolidation loan a bad idea? 

A debt consolidation loan is a bad idea if you get charged high interest and fees, or if you are already struggling to make your monthly payments. How will you repay the loan? In your case, you may need a hardship debt relief program. 

The monthly payment on a debt consolidation loan is around the same as when you pay minimum payments, so if you are barely making your minimum payments each month, a debt consolidation loan may not be your best route to take. On average, it takes five years to pay back a debt consolidation loan, can you go another five years of paying minimum payments?

Additional Resources:

Side by side comparison of every debt relief program available in 2017 (Includes; Pros VS. Cons)

Try this debt relief program calculator here

How much will a credit card company settle for?

If you settle the debt with a third-party debt collection company that buys the debt from your original creditor — you can reduce the balance at that point by as much as 30%-80% (on average). A credit card debt can be settled for a fraction of the total balance owed in most cases, but not while you are still current on payments. If you try to settle a credit card debt directly with the original creditor, they probably won’t agree to any debt reduction.

Would they rather I fall behind on my payments and not pay them at all?

Don’t fool yourself. Your creditors are getting paid one way or another. The banks have ulterior motives. They have a plan to victory, regardless, of if you make the payments or not. 

After falling behind on your credit card payments, for 6-months or longer, now you start to gain negotiating leverage because the banks start to feel like they may never get paid and your only other option would be bankruptcy. After 6-months of being delinquent on payments, your account will also have been written-off in most cases, and sold to a debt collection company. You can get large discounts on what you owe when negotiating with Debt collection companies, which is why debt settlement companies wait until the debt collection company takes over the debt before they start negotiating. Keep in mind, you could get sued by the credit card company and your credit is getting trashed, after you stop paying your bills. 

The upside with debt settlement is that you can get large discounts on your debt — See Debt Settlement Example (Citibank Credit Card Balance of $4,216.14, Reduced to $1,475.75, Saving the Client $2,740.39)


There is no set amount that a creditor will settle for, each debt collection company may have their own policies, and what it comes down to is — how good you are at negotiating debt. An experienced negotiator may settle a debt at 20-cents on the dollar. Here are some helpful resources to help you settle debt on your own.

Learn how to negotiate or settle debt on your own by watching this video.

Or learn more about joining a debt negotiation program

Call 1-866-376-9846 to speak with an IAPDA Certified Counselor who can advise you on what your best option will be.




How much will a credit card company settle for?

Debt settlement programs don’t focus on your credit score. A debt settlement program does focus on eliminating debt and saving you money.

What happens when I stop paying my credit card bills?

Once you fall behind on a credit card payment by more than 4-6 months, the bank will write-off the debt as an “uncollectible debt.” By writing the debt off, the bank financially benefits through tax breaks, essentially getting reinbursed. Plus, banks use insurance to recoup lost revenue, like your debt was an asset that went bad. Your debt will then get sold to a third-party debt collection company so that the banks can make additional profit, not having any regard for your personal life and the long-term devastating effects they just inflicted on your life. The debt collection company will then add-on more fees so that they are profitable. Debt collectors then start calling and harassing you, until you get scared and pay. It’s a vicious cycle designed to make the banks rich. 

Get Your Free Consultation with an IAPDA Certified Debt Expert at 1-866-376-9846. (We’ll Help You Fight It)

How does a debt settlement program work? 

A debt settlement program can help you pay off unsecured debt, including credit card debt, store and gas card bills, medical bills, utility bills, and personal loans. You cannot settle secured debt such as home mortgages and car loans in a debt settlement program.

Once you are approved for a debt settlement program, the company takes over dealing with your creditors. You only have to make one monthly payment. At Golden Financial Services, if you have a hardship situation pop-up one month, call in, and we will reduce your payment for that month or let you skip a payment.  

Since your debt is getting reduced by a substantial amount, your overall monthly payment will be significantly lower than what you were paying when paying minimum payments. You can be debt-free within around 3-years on average by using a debt settlement service.

Debt relief companies that are highly rated by the Better Business Bureau and who have no complaints — will usually quote their clients conservatively and always perform better in the end. 

How BBB A+ rated and accredited debt relief companies work

Golden Financial Services is rated A+ at the Better Business Bureau

Click here to continue reading about how a debt settlement program works. 

How long does a debt settlement stay on your credit report?

After your debt is paid off with a debt settlement program, the negative marks could stay on your credit report for several years. In some cases, a debt settlement company will demand the negative marks get removed as part of the deal, before agreeing to a settlement. 

Sometimes the creditors will refuse to remove the negative marks even after the debt is paid off, just because that would require extra work for them and banks can be lazy.

Can a credit repair program get “negative marks” and “debt collection accounts” removed from a person’s credit report after debt settlement?

A person could use a credit repair program to dispute the negative marks and get them removed in many cases. Here’s the trick, dispute the debt through the credit reporting agencies (Experian, Equifax, and Transunion). Don’t try to dispute the debt with the debt collection company. If you dispute a debt through the credit reporting agencies, you are essentially letting the credit reporting agencies deal with your creditors. 

The credit reporting agencies will request for the credit card or debt collection company to provide proof of the debt and that the derogatory information being reported is accurate. If the credit card company doesn’t provide the credit reporting agencies with verification and evidence of the debt and its validity, within 30-days, the negative marks will come off your credit report. If a debt is settled and paid, with a $0 balance, your creditors will often ignore the request from the credit reporting agencies, and the marks will fall off your credit. Again, banks don’t want to deal with the extra work when there is no profit involved. If you call the debt collector and ask them to remove the collection mark from your credit report, they will say “no,” guaranteed.

WARNING: Don’t just start disputing everything negative on your credit report because that could make your situation worse, adding the extra notations on your credit report showing all of your debts “being disputed” — not a good look! 

Talk to an IAPDA Certified Professional at Golden Financial Services at 866-376-9846 (Ask about credit repair and how debt relief programs work)