Debt Consolidation and Credit Scores - Your Way to a Better Rating
There are many people out there who are afraid of debt consolidation.
Many have fallen so deep into debt that the only options left to them are either bankruptcy or debt consolidation.
And yet, many are so scared that consolidation will irreparably damage their credit that they choose to go with bankruptcy.
The fact is that nothing could be farther from the truth.
For anyone mired in a sea of red ink and left with the options of settlement, bankruptcy, or consolidation, the latter is the best method of repairing their financial standing and keeping it solid.
The first reason for this is that process of debt consolidation is one that naturally lends itself to improving one's credit score.
Every major bureau takes the number of accounts that a person has open into account when calculating his or her credit score.
Each loan puts a small penalty on the report.
By consolidating all of these open lines of credit into one loan, a person is able to close those other accounts, which means that he or she will already get a benefit out of the process.
The next reason is that consolidation simply makes it easy to pay down red ink, without once asking creditors for help.
Bankruptcy erases the debts and, because creditors get no money, also severely damages one's score.
The same goes for settlement.
Throughout the entire process, one never asks a creditor for help or assistance.
It shows both the major credit bureaus and future creditors that one can pay off one's responsibilities, and that one does not need help.
Because the amount of money that one pays is unaffected, it need not even appear on one's report.
Finally, consolidation is an easy process.
The agencies that give out the loans deal almost exclusively with people in tough financial shape and are very forgiving of delinquent payments and likely to help one out.
Many companies offer free debt assistance services, such as counseling, which can help one plan a map towards renewing one's financial life.
Even if one is unable to make his or her payments for a few months such an organization is unlikely to report him or her to a major credit bureau, as long as the payments are made eventually.
This goal of these companies is to ensure that their customers are free of their liabilities, and end up with a positive score, and they do it well.
This is the best way to recover from heavy debt while keeping one's credit score intact.
Many have fallen so deep into debt that the only options left to them are either bankruptcy or debt consolidation.
And yet, many are so scared that consolidation will irreparably damage their credit that they choose to go with bankruptcy.
The fact is that nothing could be farther from the truth.
For anyone mired in a sea of red ink and left with the options of settlement, bankruptcy, or consolidation, the latter is the best method of repairing their financial standing and keeping it solid.
The first reason for this is that process of debt consolidation is one that naturally lends itself to improving one's credit score.
Every major bureau takes the number of accounts that a person has open into account when calculating his or her credit score.
Each loan puts a small penalty on the report.
By consolidating all of these open lines of credit into one loan, a person is able to close those other accounts, which means that he or she will already get a benefit out of the process.
The next reason is that consolidation simply makes it easy to pay down red ink, without once asking creditors for help.
Bankruptcy erases the debts and, because creditors get no money, also severely damages one's score.
The same goes for settlement.
Throughout the entire process, one never asks a creditor for help or assistance.
It shows both the major credit bureaus and future creditors that one can pay off one's responsibilities, and that one does not need help.
Because the amount of money that one pays is unaffected, it need not even appear on one's report.
Finally, consolidation is an easy process.
The agencies that give out the loans deal almost exclusively with people in tough financial shape and are very forgiving of delinquent payments and likely to help one out.
Many companies offer free debt assistance services, such as counseling, which can help one plan a map towards renewing one's financial life.
Even if one is unable to make his or her payments for a few months such an organization is unlikely to report him or her to a major credit bureau, as long as the payments are made eventually.
This goal of these companies is to ensure that their customers are free of their liabilities, and end up with a positive score, and they do it well.
This is the best way to recover from heavy debt while keeping one's credit score intact.
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