How Does Merchant Cash Advance Debt Settlement Affect My Credit Score?

If you are a business owner who is looking to settle your merchant cash advance debt after signing a Personal Guarantee, you may be concerned about how your merchant cash advance debt settlement will impact your credit score. Here are a few points to take into consideration:

Step 1 – Does the account appear on your credit report? For a debt to have an impact on your credit score, it has to appear on your credit report. If the account  does not appear  on the credit report, then it will not harm your score irrespective if the debt is settled, paid or unpaid.

If you have confirmed that the debt in question does in fact appear on your credit report, then this is what you could expect once your debt has been settled or paid:

  1. If you pay a reduced amount , the credit report may reflect a notation such as “PAID IN SETTLEMENT FOR LESS THAN THE FULL BALANCE”.
  1. If you honor the entire financial obligation, the credit report may be updated to reflect a notation such as “PAID” or “PAID IN FULL”.

CREDIT REPORTING TIMELINES FOR A MERCHANT CASH ADVANCE DEBT SETTLEMENT

Depending on the state in which you reside, a collection account that has been paid will report for a maximum of 5 years on your credit. This only applicable to notations made by the actual debt collectors and to the credit reporting by the original creditor. The creditor’s trade line is subject to a 7 year maximum for the negative information.

IS YOUR MERCHANT CASH ADVANCE DEBT SETTLEMENT REPORTING INCORRECTLY ON YOUR CREDIT REPORT?

It is not uncommon for credit reports to have some mistakes. Errors occur either when the debt collection agency fails to report the settlement or when the credit bureau does not update information accordingly. Fixing these issues may involve submitting a dispute to the credit bureau informing them of the settlement and to let them know that your credit report needs to be corrected. It is recommended correspond with credit bureaus through writing and include a copy of the settlement completion letter.

EXPERIENCING DIFFICULTY FIXING YOUR CREDIT REPORT

Constantly reaching out to creditors and credit bureaus can be both frustrating and time consuming. At ZocLaw.com, we provide free credit repair services to clients who have either received a bankruptcy discharge or completed a debt settlement program.

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