How to Get Out of Debt Without Ruining Your Credit
Debt settlement, debt negotiation, debt consolidation, and bankruptcy. The ways to get out of debt are numerous. Each method has its pluses and minuses. But are there ways to get out of debt without ruining your credit? This article will give you some tips on how to get out of debt and preserve a good credit rating.
The way debt settlement works is that you put money each month into a settlement fund that you can use to “settle your debts” when the time comes. In the meantime you are not making any payments to your credit card companies and that makes them unhappy so they charge you the highest interest rate they can and charge you as many fees as they are legally able to. You can imagine what kind of effect this has on your credit rating.
When you go with debt consolidation, you make a payment to the credit counselor and they distribute your payment to the credit card companies. Minus their fee of course. They can lower your interest rate and lower your payment but most of the time, this is due to extending the term of your consolidation loan.
The credit card companies will report the act of using a debt consolidation company as working with a third party. This has a negative effect on your credit report.
Which leaves bankruptcy. Do you even need to know what this does to your credit? It is ruined for a minimum of 7 years, usually 10 and possibly much longer.
So how are you to get out of debt and have a good credit score? To have a good credit score you have to make your payments on time. When you go with any of the above debt relief methods, you are not making your payments on time so your credit rating drops.
You can get out of debt yourself, you can make higher minimum payments, increase your income, cut back your spending, and cut up the credit cards to eliminate the chance you get tempted to charge something you really don’t need. It will not be easy to get out of debt. If it was, no one would be in debt.
But with persistence and some negotiating, you can be debt free. Learn how to speed up the process and eliminate debt completely and preserve your credit score. http://www.debtcuresreviews.com/eliminate-debt/
Adam_Tijerina
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- Debt Help - How You Got Into This Debt Mess and How You Can Get Out of It - January 21st, 2009
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