Debt Relief Programs and Credit Score
In almost all situations utilizing debt relief programs can and probably will result in a lower credit score, but staying away from them because of this is very much a case of missing the forest for the trees.
If you are in severe debt you need to assess your situation objectively and most importantly look at the big picture.
Chances are, if you are struggling to carry a heavy debt load, your score is not going to be that high.
This makes mulling over dropping a few points as a result of seeking debt relief a rather ridiculous notion because your score is likely to continue to slide if things remain as is anyway.
The options open to you are simple.
You can enter into a debt relief program and sacrifice your score in the short term because you want to achieve the bigger goal of managing your financial situation, which will naturally result in a higher score.
Alternatively, you can refuse to accept debt relief assistance and try to work things out on your own in an attempt to save what is left of your credit score in the short term.
This option means that you must find a different method to the ones that are responsible for your current situation in the first place.
There are many different types of debt relief to consider.
Debt consolidation involves taking on a new secured loan at a lower interest rate and using the proceeds to pay off a series of smaller high interest ones.
While the net result of these actions may be a dip in your score, if you manage to stay faithful to your new easy payment plan it can actually be the first step on the road to a higher credit score.
The effect of choosing a debt settlement company to fight your credit battles for you can vary depending on how deep you are already in trouble.
If you are already late over 90 days late on your outstanding accounts, turning your negotiations over to a specialist debt settlement company may not dent your score as much as if you were on top of your payments.
The reason behind this is simple.
If you were already late on your payments, the old adage 'you can not be late twice' rings true in this instance, because holding back from paying a little longer to negotiate a smaller payoff balance will be hardly discernible on your credit score.
If however, you were paying no time and decided to go to a debt settlement company the strategy of withholding payments will cause your credit score to take a beating.
The overriding message is clear.
Sometimes in the interest of achieving a long-term goal, you must make short term sacrifices.
When you are trying to get out of debt your credit score may be looked at as a type of collateral damage, but the long-term goal of improved financial management should be able to restore it to even better levels.
If you are in severe debt you need to assess your situation objectively and most importantly look at the big picture.
Chances are, if you are struggling to carry a heavy debt load, your score is not going to be that high.
This makes mulling over dropping a few points as a result of seeking debt relief a rather ridiculous notion because your score is likely to continue to slide if things remain as is anyway.
The options open to you are simple.
You can enter into a debt relief program and sacrifice your score in the short term because you want to achieve the bigger goal of managing your financial situation, which will naturally result in a higher score.
Alternatively, you can refuse to accept debt relief assistance and try to work things out on your own in an attempt to save what is left of your credit score in the short term.
This option means that you must find a different method to the ones that are responsible for your current situation in the first place.
There are many different types of debt relief to consider.
Debt consolidation involves taking on a new secured loan at a lower interest rate and using the proceeds to pay off a series of smaller high interest ones.
While the net result of these actions may be a dip in your score, if you manage to stay faithful to your new easy payment plan it can actually be the first step on the road to a higher credit score.
The effect of choosing a debt settlement company to fight your credit battles for you can vary depending on how deep you are already in trouble.
If you are already late over 90 days late on your outstanding accounts, turning your negotiations over to a specialist debt settlement company may not dent your score as much as if you were on top of your payments.
The reason behind this is simple.
If you were already late on your payments, the old adage 'you can not be late twice' rings true in this instance, because holding back from paying a little longer to negotiate a smaller payoff balance will be hardly discernible on your credit score.
If however, you were paying no time and decided to go to a debt settlement company the strategy of withholding payments will cause your credit score to take a beating.
The overriding message is clear.
Sometimes in the interest of achieving a long-term goal, you must make short term sacrifices.
When you are trying to get out of debt your credit score may be looked at as a type of collateral damage, but the long-term goal of improved financial management should be able to restore it to even better levels.
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