1.888.683.6514 – *FREE* Debt Settlement Consultation, reduce your debt up to 89% or more. Call TODAY! If your current financial situation is very gloomy then this article will provide some light at the end of the tunnel. No doubt you are very concerned about debt settlement and its effect on your credit score. I’ll explain how debt settlement affects you and what you can do to minimize those effects. Let’s get right into it shall we. Debt Settlement Effect on Credit Score I wish I could say otherwise, but debt settlement definitely impacts negatively on your credit score. Due to the fact the creditor suffers some financial loss in forgiving a portion of the debt; lending agencies tend to view this as a bad sign against you. This is easy to understand if you consider that if you borrow $500 and only have to repay $250, the lender has actually lost money. This causes other lenders to view you as a credit risk since you have demonstrated an inability to repay previous loans. The impact of course will depend on the amount of the initial loan and the amount that is eventually written off by the creditor. All in all, you can expect that the higher the amount written off the greater the impact on your credit standing. As mentioned before the debt relief company that does the negotiating will always do their best to reduce the impact on your credit score but a general rule is to expect a credit rating below 500 once debt settlement is recorded by the various credit rating …