Joining the Freedom Debt Relief program can have a negative impact on your credit score. This is because Freedom Debt Relief negotiates debt when credit payments are behind, resulting in an effect on your credit score. It’s important to be aware of the consequences of joining a debt settlement program before making a decision. In fact, settling your debt can have significant implications on your credit score, causing it to drop hundreds of points in a short amount of time.
Many people turn to debt settlement when they fear they won’t be able to pay back their debt in full, without realizing the potential negative outcomes of the settlement. Although you may have done everything right, such as hiring a reputable company and making payments, your credit score may still suffer.
In this article, we will explain why settling your debt can hurt your credit score and provide alternative solutions that can help protect your credit score from a sudden decline. It’s crucial to understand the potential consequences of debt settlement before making a decision, so keep reading to learn more.
What is Freedom Debt Relief and How Does It Work?
Freedom Debt Relief is just one of many debt settlement companies across the United States. Their primary goal is to assist you in settling your debt on your behalf. The process is relatively simple. Instead of making payments to your creditor, Freedom Debt Relief instructs you to open an Escrow account and start making payments into it. This is a crucial step for two reasons. First, becoming delinquent on your payments is typically the only way that your creditor will entertain a negotiation. Second, if you have not missed any payments up until this point, this is the first thing that will start to negatively impact your credit score.
Once you have made a considerable amount of payments into the Escrow account and missed enough payments, Freedom Debt Relief will begin contacting your creditor to negotiate. The process is successful when your creditor agrees to a negotiated repayment, and the funds from your Escrow account are diverted to both your creditors and to Freedom Debt Relief for their services.
While Freedom Debt Relief has a decent rating on Trustpilot, it appears that their Google Review function has been turned off.
Comparing Freedom Debt Relief’s Costs to Other Debt Relief Options
If you received a quote from Freedom Debt Relief but are unsure of your fee structure, you may be paying more than necessary. For example, if Freedom Debt Relief is charging you 25% of your enrolled debt while another provider charges 15-20%, you could potentially pay thousands in additional fees.
How Debt Settlement Affects Your Credit Score
If you’re considering debt settlement, it’s essential to understand the impact it can have on your credit score. Unfortunately, there’s no way around it – debt settlement will negatively impact your credit score. Here’s what you need to know about how it works:
Missed Payments Hurt Your Score
To begin the debt settlement process, you must first stop making payments on your debt. This alone can hurt your credit score, even if you don’t go through with the settlement. Missing one or two payments isn’t enough – you must miss payments until your account is seriously delinquent, which can take several months. Before pursuing debt settlement, consider whether you have kept up with all payments so far. If so, it may be better to explore other debt relief options that won’t result in missed payments on your credit report.
Forgiven Debt Also Affects Your Score
Once your debt is settled, it will no longer be listed as delinquent or unpaid. However, it will show that part of the debt was forgiven, which can also hurt your credit score. This is another reason why debt settlement may not be the best option for your situation. If you’re able to make some payments but not the full amount each month, consider negotiating a payment plan with your creditor. Adjusting your payment schedule won’t hurt your credit report as much as settling your debt.
Debt settlement does have a negative impact on your credit score. By understanding how the process works and considering other debt relief options, you can make an informed decision about which strategy is best for you.
Does Freedom Debt Relief Harm Your Credit Score More Than Other Companies?
While there may be negative reviews about Freedom Debt Relief online, it’s important to note that almost every debt settlement company follows a similar pattern and results in a similar impact on your credit score. Unfortunately, debt settlement can harm your credit score, regardless of the company you choose to work with. This means that your credit score will be equally affected, regardless of the debt settlement company you choose.
Alternative Options to Consider
If you’re worried about the impact of debt settlement on your credit score, there are alternative options to explore that can minimize the damage. Here are some of these options:
Debt Management
Consider seeking help with debt management if your debt outweighs your monthly income. Work with a financial counselor to organize your finances and stay on track with your payments. This can help you feel more confident moving forward while paying off your debt.
Talk to Your Creditor
Discuss the possibility of a revised repayment plan with your creditor before considering settlement. If the creditor doesn’t report the conversation or decision, there may be little to no impact on your credit score. Offer to pay part of your debt each month, and there’s a chance that the creditor will accept the smaller payment and allow you to pay off your debt over a longer period of time.
Sell Your Belongings
Consider selling tangible assets or items to repay the loan without any consequences. Repaying the loan won’t raise any red flags on your credit report, and you won’t be at risk of missing payments.
Debt settlement can harm your credit score, regardless of the company you choose. However, exploring alternative options such as debt management, talking to your creditor, or selling what you owe can minimize the damage.
Freedom Debt Relief Reviews: What to Consider
When researching debt relief companies, it’s essential to consider their reputation and track record. Here are some things to keep in mind when looking at Freedom Debt Relief reviews:
Company History and Reliability
Consider how established the company is before deciding to work with them. A reliable debt relief company should have years of experience backed by generally positive reviews. Freedom Debt Relief, for instance, was founded in 2003 and has amassed thousands of reviews since then.
BBB Reviews
The Better Business Bureau (BBB) is a trusted review site that considers multiple factors when evaluating a business. It also includes client reviews and complaints, which contribute to the business’s rating. Freedom Debt Relief has an A+ rating from the BBB, but the client rating is 4.3 out of 5 stars based on 1,428 client reviews.
Accreditation Status
While Freedom Debt Relief has been around for 19 years, it’s important to note that their BBB accreditation date is 9/9/2021. Accreditation isn’t difficult to receive, but it’s something that marks a company as more reliable. Accredited businesses receive grades based on client reviews and testimonials, making them a more trusted choice.
When considering Freedom Debt Relief or any other debt relief company, it’s essential to research their reputation, track record, and accreditation status. By doing so, you can make an informed decision on which company to choose for your debt relief needs.
The number of reviews a debt relief company has can be a strong indicator of their reliability and reputation. Here’s what to keep in mind when evaluating reviews:
When a company has a small number of reviews, it could mean that they are relatively new or that clients are dissatisfied with their services. In this case, it’s essential to read reviews carefully and conduct additional research before deciding to work with the company.
On the other hand, when a company has thousands of reviews, you can trust that the reviews are more reliable. Freedom Debt Relief, for instance, has thousands of reviews, and their client rating on BBB is 4.3 out of 5 stars.
Clients who have had positive experiences with Freedom Debt Relief noted that the company was easy to work with, always available, and willing to talk through the process as many times as needed. This speaks to the company’s reliability and commitment to helping clients achieve financial freedom.
However, some clients claimed that Freedom Debt Relief charged random fees without explanation and had difficulty canceling their contract. It’s essential to carefully evaluate negative reviews to determine if the issue is an isolated incident or a recurring problem.
When evaluating debt relief companies, the number of reviews matters. Companies with thousands of reviews and positive ratings are generally more reliable than those with a small number of reviews or negative ratings. Be sure to read reviews carefully, both positive and negative, to make an informed decision on which debt relief company to choose.
When evaluating a debt relief company, it’s important to consider reviews from multiple sources. Here’s what you need to know about Freedom Debt Relief’s Google and Facebook reviews:
Google Reviews
Freedom Debt Relief surprisingly does not have any Google reviews to be found. This could be because they haven’t set up their Google My Business page or that they were receiving an overwhelming amount of negative reviews, causing them to take down their Google My Business page.
Facebook Reviews
Freedom Debt Relief has disabled their Facebook reviews and instead integrated their Trust Pilot reviews into their page. However, this could be seen as a disadvantage, as dissatisfied customers typically use social media to leave negative reviews.
Recent Posts
To get a sense of how clients enjoyed working with Freedom Debt Relief, we looked at some of their recent posts. However, most of the comments warned others not to enroll in the program. For example, one woman claimed that she ended up with more debt than she started with, while another customer was pushed to apply for a high-interest loan instead of a debt consolidation program or debt settlement program.
While Freedom Debt Relief has positive reviews on BBB and Trustpilot, the lack of Google reviews and disabled Facebook reviews are a red flag. Additionally, recent posts show that some customers are dissatisfied with the service they received from the company. Be sure to conduct thorough research before choosing a debt relief company to work with.
Freedom Debt Relief Reviews on Trustpilot
Freedom Debt Relief has a substantial number of reviews on Trustpilot, which is a reputable platform for gathering customer feedback. However, it is worth noting that the company appears to steer their clients towards leaving reviews on the site, which could potentially skew the ratings. That said, Freedom Debt Relief has an impressive average rating of 4.5 out of 5 stars on Trustpilot, based on nearly 36,000 customer reviews.
The majority of the positive reviews on Trustpilot highlight Freedom Debt Relief as a reliable and trustworthy company. Around 91% of the reviews were either “Great” or “Excellent.” However, some of the negative reviews are concerning. Many clients have reported that they were misled about the program they were entering into, while others have complained about being forced to take out loans from a branch of Freedom Debt Relief to pay off their debt. Some have also spoken of high fees that have doubled their debt, and miscommunication between different departments of the company that led to the suffering of the clients.
It is also worth noting that many of the positive reviews on Trustpilot focus on initial contact and customer service, with customers praising the helpfulness of the representatives they spoke to. However, some reviews were from clients who had only just started the process with Freedom Debt Relief, so it remains to be seen if their positive experiences continue throughout the program.
Consider the Timeline of Reviews
It’s important to note the timeline of reviews to get an accurate picture of the company. In the Trustpilot screenshot above, you can see that the reviewer was invited to review Freedom Debt Relief immediately after the initial contact. This means that the reviews may be skewed towards positive feedback, especially since the reviewer has not experienced any debt settlement yet. While it is important to take reviews with a grain of salt, it is also crucial to analyze when they were written and the context behind them.
Employee Reviews on Freedom Financial
Checking employee reviews is another way to gain insight into the company. Although Freedom Debt Relief is part of Freedom Financial, we can still look at employee reviews on Glassdoor for Freedom Financial. One employee reported that upper management showed no interest in employees or clients.
It is important to note that the overall employee rating for Freedom Financial is only 3.9 out of 5, which includes all aspects of Freedom Financial and not just Freedom Debt Relief.
Conclusion
Freedom Debt Relief is a company with generally positive online reviews. However, there are some potential issues to consider. For example, no Google reviews are available, which is surprising for a company that has been in business for over 19 years. Additionally, Freedom’s website and Facebook page only display reviews from one source, Trustpilot, which may have a high number of positive reviews due to the company inviting customers to leave reviews soon after initial contact.
While there are a significant number of positive reviews on Trustpilot, many of them were from customers who had just started the process and had not yet experienced any debt relief services. It is important to carefully consider these factors before making a decision.
Despite these concerns, Freedom Debt Relief is an established company with a long history of helping customers. If you are still unsure about their services, consider reaching out to friends or acquaintances who have worked with the company before to hear about their experiences. And remember, taking a step towards debt relief is a positive step, no matter which company you choose to work with.