Credit Repair Through Creditor Negotiations

Credit repair through creditor negotiations is advantageous to both you, the consumer, and to the creditors that you owe. After all, it is in your best interest to either prevent or to repair your poor credit in the event that a credit check is necessary somewhere down the road for employment, to purchase a house or to secure a loan. At the same time, creditors also want to recoup at least some dollars for goods purchased and services rendered. If you approach creditor negotiations with skill and savvy, there is no reason why most creditors will not be willing to work with you to develop a mutually beneficial plan of action for payment.

Understanding Creditor Negotiations

Here are helpful steps for credit repair through creditor negotiations:

The first step that you will need to take is to list all of your creditors, their contact information and the amount that you owe each. Note the minimum payments and interest rates, and then determine how much you can comfortably afford to pay each month. Try to pay off bills with higher interest rates first.
When you reach out to your creditors, keep in mind that the customer service representative with whom you initially speak may not have the authority to negotiate with you. For that reason, ask to speak to either a supervisor or to someone who oversees credit reporting.
Be honest about your situation so that your creditors understand that you are committed to fulfilling your promise of payment. Let them know how much and when you can pay monthly to see if arrangements can be made to accommodate your circumstances.
Consider requesting either a lower account interest rate or the option to pay off your debt in a lump sum for a reduced amount if you can make payment immediately. Some creditors may be willing to accept as little as $.70 on the dollar, which is essentially 30% less than the balance that you owe.
Request a letter that explicitly outlines the terms of your agreed upon payment plan to avoid seeing late fees and other unexpected charges on future statements, further derailing your debt-free goal. A statement of negotiated terms is critical!

Getting Help

When working towards credit repair through creditor negotiations, you should be straightforward about what you can and cannot do, but you should also express appreciation for creditors’ willingness to work collaboratively with you to avoid long-term challenges. Be polite, be flexible and be gracious; creditors will respond in kind to the way that you approach them when presenting your case. Good manners are a must when your credit is at stake! Just remember to start the negotiation process sooner rather than later since negotiations with a creditor are far more likely than negotiations with a collection agency. You may also wish to get the help of an experienced attorney who can help you to negotiate with creditors and to ensure that any settlement or arrangement you make with those creditors is fair and in your best interests.

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