If you are looking for a way to get out of debt without damaging your credit score, you have the option to go into debt consolidation.
Here’s the usual scenario for you to want this end. You are burdened with your growing debt and while you are struggling to make payments, you haven’t missed out on any. That means your credit score is still in good shape. However, you know that you need help because the strain of trying to make ends meet is already taking its toll. You know that if you falter, you will miss a payment and you know that it will cost you that perfect credit score that you had been taking care of.
The reason to keep your credit score high may vary. The bottom line is usually a plan to invest for your personal or professional growth. That investment is significant enough to require funding from a professional lending company. To get a low interest rate out of that financial assistance, you need to keep your credit score in top shape.
Given this, what are your options to keep your credit healthy and at the same time, get the debt assistance that will free you from your credit obligations?
Debt consolidation is the best option for you. It can happen in two ways. One is through debt consolidation loans. This means you will get a personal loan that is enough to cover your other debts. Once you are approved of this loan, you will pay off your high interest debts to close them off. Once they are paid off, you only have to concentrate on the new loan that you just took out. This will make your payments easier because you only have one big debt to think about. Not only that, since you still have a good credit score, it is safe to assume that you will get a low interest rate on this funding.
The other option that you have is getting a debt counselor to help you – which is what debt management is all about. The idea is to choose a reliable company and enroll your debts with them. The counselor who will be assigned to your account will study your finances and the various debts that you have. They will help you create a debt management plan or DMP that will serve as your guide throughout the whole program. With this plan in hand, the counselor will negotiate with your creditors to see if they will accept a lower monthly payment. This becomes possible because you stretched your payments over a longer term. If they agree, you can make a single payment to your debt counselor and they will take charge of distributing that to the debt accounts that you have enrolled with them.
While there are other debt relief options like debt settlement and bankruptcy, they can harm your credit score so you may not want to choose them. Consolidating your debts is the safest route to take and still emerge with a good credit score.
Of course, to really keep your credit score high, you need to start practicing the right financial habits. That means making smarter choices as to where your income will go, living within your means and saving for the rainy day. If you combine an effective debt relief option and these financial management skills, you should be able to get and stay out of debt.