Debt Settlement is a ‘Get out of debt' tool not a means of increasing your credit score.
In fact; settling a debt can have an opposite affect by decreasing your score. This does not mean to stop settling your debts; heck if you can knock off hundreds or thousands of dollars from your debts; then by all means do so; you can rebuild your credit afterwards.
However, if you are seeking to increase your score AND settle your debts see if you can get the derogatory info deleted (removing late payments, charge off status, collection, etc) OR the notation Paid In Full.
Deleting the negative information is self explanatory; it makes it seem as if the event never happened (not all accounts should be deleted, some would be best updated to paid as agreed status leaving good payment history on your credit report).
Paid In Full means that you had some troubles in the past but at the end of it all you met your financial obligation and paid the account off per the terms of your initial agreement. Why is this better than ‘Settled'?
Because FICO views settled accounts just as negatively as a collection account. It means you are a risk to lenders and have proven to be incapable of meeting your financial obligations; thus your score can suffer as much as 100 points depending on where you were prior to the settlement and how many late payments were reporting leading up to the settlement of the account.
So… if you can't get a deletion; at the very least get a notation of Paid in Full/Paid As Agreed.
Hope this helps!
