December 1, 2023

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Freedom Debt Relief (FDR) is a debt settlement company that helps customers negotiate debt settlements with their creditors. While its primary goal is to assist customers in achieving financial freedom, one of the main concerns customers have is whether enrolling in FDR’s program will harm their credit.

The short answer to this question is yes, signing up for Freedom Debt Relief will have an impact on your credit score. However, it’s worth noting that the extent of this impact will depend on several factors, including your debt amounts and payment history leading up to enrollment. In this article, we will explore the inner workings of FDR, how it affects your credit, and some of the frequently asked questions about Freedom Debt Relief.

How Does Freedom Debt Relief Work?


Freedom Debt Relief’s primary objective is to help customers achieve financial freedom and ease the burden of debt. They do this by offering debt settlement services, where they negotiate with creditors on your behalf to reduce the amount you owe. Here’s a brief overview of how FDR works:

1. Free consultation: The first step is to schedule a free consultation with an FDR representative who will review your financial situation, including debts you need to settle, monthly expenses, and income.

2. Customized plan: After reviewing your situation, FDR will create a customized plan that outlines how much you should save monthly and an estimate of the program duration.

3. Monthly savings: Based on the recommended savings, you’ll start making monthly contributions to a dedicated FDR account.

4. Debt negotiations: During the program, FDR negotiates with your creditors to settle your debt for less than the full amount you owe.

5. Settlement: Once FDR reaches an agreement with creditors, they’ll use the money you’ve saved to pay off the reduced amount, and you’ll be charged a fee for the service.

How Does Freedom Debt Relief Affect Your Credit?

When you enroll in Freedom Debt Relief, you stop making payments on your debts, which typically results in late payments and delinquencies on your credit report. Late payments have a significant impact on your credit score, and the more delinquencies you have, the more severe the impact.

In addition to missed payments, FDR’s debt settlement program may also hurt your credit score in the following ways:

1. Hard inquiries: FDR may perform a hard credit inquiry when you enroll in its program to determine your eligibility, which has a negative impact on your credit score.

2. High debt-to-income ratio: Enrolling in FDR’s program may increase your debt-to-income (DTI) ratio, which is a way to measure how much debt you have relative to your income. A high DTI ratio indicates that you may have trouble repaying your debt, which can lower your credit score.

3. Public records: If your creditor sends your delinquent account to a collection agency, this action is recorded as a public record on your credit report. A public record is a negative item that can significantly reduce your credit score.

It’s worth noting that while settling your debts will hurt your credit score, it’s likely that your score has already taken a hit due to missed payments and high balances on your credit accounts. Moreover, enrolling in FDR’s program may help you get out of debt faster or pay less than the full amount owed, which may improve your overall financial picture in the long run.

FAQs about Freedom Debt Relief

1. Can Freedom Debt Relief help me with all types of debt?

FDR specializes in unsecured debt, such as credit card debt, personal loans, and medical bills. It does not handle secured debt, including car loans or mortgages.

2. Will I be able to use my credit cards while enrolled in FDR’s program?

No, you’ll be required to stop using your credit cards during the program, which may also impede your ability to apply for new lines of credit.

3. How much does Freedom Debt Relief charge for its services?

The fees charged by FDR vary depending on the amount of debt you owe, the duration of the program, and the outcome of negotiations. However, FDR typically charges between 15% to 25% of the total debt amount enrolled in the program.

4. Can I withdraw from FDR’s program at any time?

Yes, you can withdraw from FDR’s program at any time without penalties.

5. Are there any tax implications of enrolling in FDR’s program?

If you receive debt forgiveness or cancellation, it’s considered taxable income, which may impact your tax liability.


If you’re thinking about enrolling in Freedom Debt Relief, it’s important to understand the impact it may have on your credit score. Although the program is designed to reduce your debt, the debt settlement process generally goes hand in hand with negative credit reporting. However, this may be a necessary cost to achieve financial freedom and get out of debt. By educating yourself about the pros and cons of enrolling in FDR, you’ll be better equipped to make an informed decision and begin your journey to financial stability.

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Article Summary:

Freedom Debt Relief (FDR) is a debt settlement company that helps customers negotiate debt settlements with their creditors. However, enrolling in FDR’s program can harm your credit score as it may cause missed payments, increase your debt-to-income ratio, and result in public records on your credit report. FDR specializes in unsecured debt and may charge between 15% to 25% of the total debt amount enrolled in the program. While enrolling in FDR’s program may help you get out of debt faster or pay less than the full amount owed, it’s important to weigh the pros and cons and make an informed decision.

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