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I Want to Repair My Credit Report and Improve My Credit Score After Debt Settlement. – Brian

“Dear Steve,

I had 3 charge-offs on my credit report: (1) Capital-One–$5,200 (2) Macys–$1,300 and (3) Dell Financial Services–$4,200.

I used a settlement company to pay these off (at about 50% rate, plus 35% of the savings to the debt settlement company).

I have ~ 10 derogs reported on my credit report from a student loan lender who marked that I was 60 days late. This is bogus but all I have is notes (and an affidavit I’ll put together) stating I called the lender and was given a forebearance (b/c I was in the process of consolidating all my student loans under a governemt program).

My question is, where do I go now? I’d like to increase my credit score. I’ve paid off all my credit cards (only have one, 10 years of payments, all on time) and paid off my car (80 payments ontime). I have one debt, a student loan, for $100,000 that is set for repayment in June 2011 (at a reasonable amount of ~$450 per month).

What can I do about those 10 derogs. I DID receive an assurance from the student loan lender agent (over the phone) that they would not post a derog for these loans as long as the loans were successfully consolidated within a few months. What do you recommend? Will an affidavit be enough? What about a BBB complaint? I’ve also heard of “Good Will” letters requesting they delete based on good will. Lawsuit? FTC Complaint?


Dear Brian,

The reality is your only real routes on those student loan negative items are to dispute them or sue the lender. I would suggest you dispute those items with the individual credit bureaus and provide supporting documentation with your dispute why they are not correct. Of course if you have consolidated your loans and made at least 12 on-time payments, according to the servicer, the negative history should be removed automatically.

If the borrower of a loan made under this part who has defaulted on the loan makes 12 on time, consecutive, monthly payments of amounts owed on the loan, as determined by the institution, or by the Secretary in the case of a loan held by the Secretary, the loan shall be considered rehabilitated, and the institution that made that loan (or the Secretary, in the case of a loan held by the Secretary) shall request that any credit bureau organization or credit reporting agency to which the default was reported remove the default from the borrower’s credit history. – Source

It sounds like with the negative history you have from settling your debts and the lack of use of credit now, your credit will improve only slowly. If you want to improve your score quickly you need new credit to score on and time to pass for the negative events.

See also  My Past Credit is Dragging Down My Credit Score. I Want to Buy a House.

If there is not enough new good credit then there is nothing to bring your “grade” up. Think about like you are in school. You can get a B from a C but you need an A to do it.

Here is a guide I wrote for people to rebuild their credit after bankruptcy but the same process applies to post-debt settlement as well.

Please post your responses and follow-up messages to me on this in the comments section below.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


  • Actually, I have. To date, I have contacted 4 companies, 2 for settlement, 2 for DMP. My problem is everyone seems to want me to just stop paying (1 company said “negotiations” wouldn’t start until I was 6 months behind). Also, and this is just a personal belief, it seems wrong for me to make creditors wait (after all, I DID borrow from them, and promise to pay them back) for payment, while I send payment to someone new, who will (might) in turn pay the creditors. Since late payments stay on a credit report as long as bankruptcy does, why would anyone fall behind, on the HOPE of getting payments reduced (after all, the only actual promise the 4 companies made was that they would TRY to get interest/payments lowered). If I file Chapter 7, both my interest and my payments go to zero (after initial attorney fees). I haven’t ruled out any choice, yet (I even got a bank to agree to loan me 10K, at 16.5%), but I got myself into this mess, and I’d like to try to get myself out of it (a process I think is helping me understand how I got back here in the first place).

  • 42K on 18 cards. 8 are at 26.99, all but 1 above 20 APR. I make minimum payments, but that leaves not much for anything else (so I play the game of “make a payment, wait for it to post, then use the card again). Of course, the ultimate goal would be “debt free”, but I’m realistic (I’ve read your e-books). My “goal of the moment” is to refinance the house, but it needs repairs first, which I don’t have anything saved for, because of the $1600 per month minimum card payments. I can’t get a home improvement loan, again, because of the debt to income ratio, not great credit score, previous bankruptcy, etc. My “Plan A” (currenty working on my “true” budget numbers ) was to try to get my interest rates/balances negotiated down (would like to do this myself, if you can guide me to the “right” creditors to talk to), followed by “Plan B” consolidate remainder into 1 loan. This would (hopefully) allow me to save enough for the home improvements, which would put me in the position of either refinancing or, perhaps, selling the house (only been in it 5 years, so not much equity).

  • (had to back up 1 question, as we’re in too far for the “reply” button to show on my page)

    Average score mid 600’s…..

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