Answer: Settlements hurt your credit because you are not paying the debt in full. In most cases you are doing just what the terms indicates which is settling for an amount that is less than what you actually owe. As an example if the debt you owe is $10,000 and you settle for $7,000 with the creditor or a third party acting on behalf of the creditor, you have not paid the entire debt back. Therefore, it is often looked upon by creditors as a greater risk to loan you money or extend you credit as they too would run the risk of only receiving a "partial" payment. Be careful when working with a settlement company because they may not disclose the negative impact on your credit as well as the fees associated with their services.

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Answer: Debt counseling will often improve your credit over the long run because you are paying your entire debt in full, and showing a positive payment history while making consecutive monthly payments. Some creditors report that you are enrolled in a credit counseling program by showing a CC, but this is neither a negative or positive designation. It merely indicates that you are enrolled in a program, and making an effort to eliminate your debt. If you are behind on your bills or carrying high balances with open lines of credit, then you have already negatively impacted your credit and need to improve your credit score anyway.

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Answer: You can, but be very careful! By using the equity in your home, you can often roll additional debt into the first or second mortgage, but you will be increasing the amount you owe the bank which ties up the equity in your home. It is possible that at a lower interest rate you may be better off increasing the principle amount on your mortgage, but you have to consider the negative impact it may have should you ever need a home equity loan or if you decide to sell before the debt has been paid down. There are always several factors when refinancing and although it is an option, you have to also consider that there are significant fees associated with the process and the cost may offset the advantages.

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Answer: With all of the credit card companies offering low or zero interest balance transfers, you have to ask yourself why they would be doing this? It is not likely in the best interest of the consumer, but more likely benefit the credit card companies. By having you transfer other balances to their bank, they are giving you a very small window of time at the lower rate, and then they increase the interest rate which is now impacting a higher balance ( because you have combined other credit card balances into one account) only to put you further in debt. In addition, most  credit card companies keep the window of transfer so short that by the time the balance has been forwarded you will only get too make a few payments at the lower rate.

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