How to Clear Settlement Solutions

Settlement solutions will allow you clear up old debt; however they don't automatically improve your credit score. Borrowers and creditors reach settlement solutions to reduce the debtor's amount of outstanding debt. Settlement agreements are achieved in exchange for a repayment promise. Individuals who are overwhelmed by outstanding debt should negotiate payment terms with their creditors before sending any funds. In some cases, creditors will accept less than what is owed. This occurs on debt that has been charged off due to months of non-payment.

Instructions

1




Examine your settlement agreement.

Examine your settlement agreement. Settlement agreement terms will differ from your original loan agreement. Settlement terms may require you to make a lump-sum payment or scheduled payments. Whatever the situation, payments will be arranged according to the settlement loan amount. Pay close attention to the clause that details consequences that may result from the loan being satisfied.

2




Your settlement amount can be paid by check.

Pay off the settled amount. Sometimes this is easier said than done. Depending on your financial situation, you might be able to pay this amount off in one payment, or it may take you several payments. Your settlement amount must be paid in full before you attempt to clear the settlement.

3




Contact your credit by telephone.

Request a payoff. Contact the creditor and/or collection agency in charge of your account. Insist that the creditor report the account as "paid." Be certain to request a paid-in-full letter as soon as your debt has been satisfied.

4




Goodwill letters include your Social Security number.

Construct a goodwill letter. This letter requests that the credit bureaus remove the settled debt and/or change how the debt is reported. A goodwill letter will include your name, address, Social Security number, account number and the name of the creditor. Make sure all your information is up-to-date and accurate. Highlight positive aspects of your credit history. For example, you can elaborate on your solid payment history, credit score improvement and low credit card balances.

5




Clearing settlement solutions can improve your credit.

Send your goodwill letter. Your goodwill letter will be accompanied by your settlement agreement and paid-in-full letter. Mail these documents to the three credit bureaus: Experian, Equifax and TransUnion.