It doesn’t.  When you choose credit card debt settlement, you withhold payments from your credit card companies, intentionally defaulting on your account, if you have not already done so.  It’s this action that destroys one’s credit score: the charge-off or default record, not the settlement itself.  By defaulting on your credit card account, you hope that at some point your credit card issuers will be willing to settle for much less than what you currently owe them, at which point you will need to be able to offer them a large lump-sum payment.  It can absolve your credit card debts, but there’s no guarantee that your credit card companies will be willing to settle.  Credit card companies are by no means giving away free money.  Once the terms of the settlement are met, the record on the charged-off or default account will read “partially paid,” which looks better than never paid, but it will never read “fully paid” or “paid as agreed.”