Initially, you could take a small negative hit on your credit score with debt consolidation due to the negative inquiry showing up on your credit report after applying for the loan and due to a “new debt” showing up on your credit after getting approved for the loan.

However, within a few months, your credit will illustrate an improvement in credit scores due to the “past debts” getting “paid in full”.

The longer a borrower has had an account, the more weight that account will carry.

government approved credit consolidating programs-26

As of today, Americans are carrying roughly $1.021 trillion in credit card debt.

It’s risen by more than 7% over the course of 2017 — and is still rising!

Debt relief programs can have a positive and negative effect on credit scores, depending on each individual’s circumstances.

Firstly; let’s look at how debt settlement programs affect credit: If a person is behind on their monthly payments, their credit score has already been negatively affected.

Ginnie Mae is improving the presentation of Remaining Principal Balance (RPB) and RPB Factor data for pools that are paying off in the GII Factor A (factor A2_YYYYMM.zip) and Factor B Files (factor B2_YYYYMM.zip). The success of Ginnie Mae’s Mortgage-Backed Securities Program is contingent on the integrity of the collateral backing Ginnie Mae securities and on compliance with the requirements of the insuring or guarantying agencies. Ginnie Mae continually monitors Issuer participation in the MBS program, and evaluates the MSR portfolios that result from issuance activity to ensure that these portfolios do not have an impact on either the Issuer or securityholders that is adverse to the interests of the program. During a lapse in government funding, Ginnie Mae will reduce staffing to essential personnel levels.

Importantly, Ginnie Mae will continue to remit timely payment of principal and interest to investors. Ginnie Mae is providing a new Ginnie Mae Issuer Disclosure File, “issrinfo_YYYYMM.txt”, with basic address and program information on active and inactive Ginnie Mae Issuers. Ginnie Mae is revising the definition for the term “Defective Mortgage” and other clauses in Chapter 14 of the MBS Guide to reflect existing Issuer requirements under the Guaranty Agreement to cure or buy out pooled mortgages that are not insured or guaranteed by an agency of the Federal Government. For more than 40 years, Ginnie Mae has provided l​i​quidity and stability, serving as the principal financing arm for government loans and ensuring that mortgage lenders have the necessary funds to provide loans to customers.

A debt settlement company begins negotiating with creditors after a debt has been “written off” and sold to a third-party debt collection company.

Secondly; let’s look at how debt validation programs affect credit: Debts are not disputed on a debt validation program until they’re sold to a third-party debt collection company.

(See additional debt validation laws here) Debt validation does not deal with credit card accounts that are “current on monthly payments”– debt validation is only for third-party debt collection accounts.

However, clients who are current on their monthly payments will still join a debt validation program because they cannot remain current on their payments due to loss of income and financial hardship.

Fourthly; let’s look at how consumer credit counseling affects credit: Consumer credit counseling has a neutral effect on credit scores.