If health problems strike, ask for hardship rate reduction

Avoid a settlement if you can; its credit score impact lingers

Question for the CreditCards.com expert

Dear Credit Wise,
  All my credit cards are up to date, but I'm experiencing health problems and want to see if one credit card company will help by lowering my balance some. Will they do it? And how will this affect my credit score? -- Karen

Answer for the CreditCards.com expert

Dear Karen,
I am so sorry to hear of your health problems. I can understand why you are looking for help because medical issues can often be very expensive.

Unfortunately, I do not know that any of your credit card companies will lower your balance for you at this time. Because you are up to date on all of your cards, I think the credit card companies will not be inclined to offer you what is for all intents and purposes a settlement.

However, you may have luck getting one or more of them to lower your interest rate on the balances you do have.

Also, because you are concerned about how your credit score will be affected, I would not recommend any kind of settlement on your accounts. Settlements are second only to bankruptcy in terms of what they do to a credit score. Your score will be negatively affected for years if you choose to pay less than the balance owed on an account. If you find yourself in a situation where you need to apply for credit in the future, this will be an action that will likely hurt your chances for any kind of a decent rate, if you can even get credit at all.

I would recommend that you call your creditors and explain your situation. Many credit card companies offer hardship programs that may reduce both your interest rate and required monthly payment. These programs usually only last for six months to a year, but they are fairly easy to qualify for, especially in the situation you are currently facing.

This action should not have an effect on your credit score and will maybe give you a little breathing room while you deal with your medical issues. I would suggest you call all of your creditors and see what you can work out with them all.

Be wise with your credit!

See related: Credit card forebearance programs offer reprieve from debt

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Updated: 01-21-2018