Debt settlement is going to negatively affect your credit. That being said, whether it’s really going to get worse – and by how much – will depend on what your credit rating looks like today. Pursuing debt settlement usually implies that you haven’t made any payments for some period of time, in which case it’s likely that late and/or missed payments have started showing up on your credit report and your credit rating isn’t that great to begin with. However, once the debts are settled, your credit rating should begin to improve rather rapidly because your debt-to-income ratio improves dramatically.

On the other hand, if you’ve got decent credit when you enter a debt settlement program, your credit rating and FICO score should be back to about where they were within about 18 months from the time you are out of debt.