Lenders who damage you by making false claims to the credit reporting agencies are committing fraud and will be liable for damages.
Reporting information that the lending institution knows to be inaccurate or failing to report information correctly violates the Fair Credit Reporting Act § 1681s-2.

If the lenders do not follow the law (and we often see that they don’t), then your credit score will decline during the program itself. How much it will decline will depend on your original circumstances. Some of the accounts are likely to “charge off,” which will reflect negatively on your credit. However, once a debt has been settled, the settlement is reported to the credit bureaus.

After all the debts have been eliminated, your credit score should begin to improve since the negative items have been resolved. In addition, your debt-to-income ratio (an important measurement made by potential lenders that is not directly reflected in your credit “score”) will greatly improve, since you will be debt-free. There are also several useful techniques for self-repairing your credit which we allow you access to. Of course, credit is an important thing to have, but obviously your first priority should be to clear up your debts and get back on your feet financially.