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Is it worth partially settling a debt?
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You may be tempted to settle a debt at a reduced amount (partial settlement); however, it is important to know how it affects your ability to obtain credit. We’re going to be straight with you, we never recommend using credit unless it’s used to make you a profit, like a mortgage can when buying a property. Other than that, no es bueno as they say in Spanish.
Is it true that after 7 years your credit is clear in UK?
Firstly, you need to understand that any negative marks, i.e., defaults, County Court Judgments (CCJs), etc., will stay on your credit file for SIX years.
Insolvencies like bankruptcy may remain for longer than six years. Whether you settle in full or partially, the mark will stay for that period.
Does partial payment affect credit score?
Having some sort of settled status may be helpful if the debt still appears on your credit file. If a creditor or lender looks at your credit file with the view to providing you with some sort of credit facility, they may consider it either half full or half empty.
Some lenders may consider the debt being settled, even if it is only a partial settlement, as positive (a glass half full) and choose to provide you credit on that basis. Other lenders may look at the debt being partially settled as a glass half empty, as the full amount was never paid back, and this could affect whether they will provide you with credit or how much.
Remember to read The Real Debt Guy's final thoughts below!
The Real Debt Guy is a qualified financial adviser and a UK debt expert. The information in this article is considered to be true and correct at the publication date.
