Why Worry About Your Credit Score When Faced With A Workout?

Everyone worries about their credit score when we talk about a workout. Why is that? I understand completely how important a high credit score is. I also understand how hard people work to keep their scores as high as possible. What I do not understand is the persistent reluctance people have in entering into a workout program which will significantly reduce debt owed but at the cost of further credit score reductions.

First of all, most people who have major debt issues significant enough to cause them to reach out to me for assistance are already acknowledging that the debt is out of control and too large to handle in the due course of business. They are typically interested in having me engage in reducing their debt through a workout. They have already have experienced significant credit damage and are being buried by the debt service requirements. Late payments, write-offs, lawsuits, called notes, liens, levies, tax default issues, late payment history… all of this results in a lowered credit score. Thus, the likelihood is that anyone seeking assistance in restructuring their debt has already also experienced a reduced credit score.

With that in mind, if implementing some of the workout strategies I recommend and perform results in additional lowering of one’s score, what real difference does it make? First of all, your history is already damaged and the score already low. More damage is not altogether relevant. Secondarily, and far more important, are the huge benefits of experiencing a major debt reduction through a workout that may result in hundreds of thousands of dollars in debt reduction and may also be the difference between long-term survival or short-term self-destruction. Is protecting your already reduced credit score more important than experiencing a few hundred thousand dollars or more of debt reduction?

The answer is a resounding NO! Of course it isn’t and for the following reasons:

1. As stated, it is likely your score is already lowered so what is the big deal? The damage has already been done.

2. The value of the workout is immense and could save you a large amount of money, certainly worth the small setback and inconvenience of experiencing a reduced credit score.

3. There is always the opportunity for having your credit history rehabilitated which will result in an enhanced score, at least back to where it was before the credit downturn began.

4. Even without credit rehabilitation, over time and with good payment practices your score will return to its rightful position anyway.

So what is the big issue preventing forward motion on your workout program? Reap the benefits and in the end you have won the war. Worrying about your credit score and rejecting a workout program because it will further reduce your score is not a good enough reason to resist the need for and implementation of a workout program. Forget this as an issue, it is not a good reason.

Call me for help. Norm will set you up with a no-obligation teleconference.