Whenever a person settles his or her former debt with a former creditor at a much lesser amount, this actually does more damage to your credit score. Because you’ve settled with your former creditor for an amount less than what you actually owe them, the creditor eventually reports the remaining balance which you weren’t able to pay, to the credit reporting agencies, and this will get noted in your credit report as a deficiency balance. If you have debts with former creditors, make sure that you work out a full settlement with them, and guarantee that what’s accomplished between you and your creditor does not get reported elsewhere. Smooth relationship with creditors is a good way to score up your credit score.
