How Debt Negotiations Can Improve Your Credit Score

We all want a better credit score. Even if you are significantly in debt or delinquent on some accounts, it is possible to improve your score. However, the credit improving process takes time and patience. You won’t be able to boost your credit overnight, but there are ways to get you on the path to better credit.

Negotiate Your Accounts

One tool that is widely recognized, but seldom used, is debt negotiations. Most people never think to negotiate with credit card companies as part of a debt reduction plan. In many cases, you can secure a lower interest rate or obtain a waiver of delinquency fees. Reducing the overall amount of debt you are required to pay can be tricky, but it is not impossible. Negotiating with creditors can help you can pay down your debts much faster, which will improve your credit score dramatically. The faster you eliminate some of your debts, the faster your credit score will improve.

It is not important which debts you pay down first, the overall goal is to reduce your debt balance to less than 30 percent of your total credit limit per card in order to obtain the most benefit in your credit score. Whether you negotiate a lower principal amount owed or lower interest rate, be sure to keep your balances under 30 percent of your total credit limit in the future. Also, be sure to obtain a written letter from your creditor once your accounts have been out of delinquency for three or more months. Having this documentation will help you secure future credit and continue to improve your credit.