Does Debt Consolidation Affect My Credit? Any Way To Solve It?
Does Debt Consolidation Affect My Credit? Any Way To Solve It
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Many consumers these days are looking for ways to reduce their debt and live a stress free life.
There are many debt management firms offering assistance for a reasonable fee. Some wonder does debt consolidation affect my credit and is there any way to solve it? There is no quick remedy for solving debt woes but it can be improved gradually with time.
Aurora Lillo Editor of the "Best Debt Consolidation Services" website -- http://www.ReputableDebtConsolidationCompanies.com -- pointed out;
"...When you consolidate your financial obligations you are negotiating with lenders to waive late fees and roll back interest rates to more favorable terms so you are actually paying less money than you actually owe. This can hurt your credit because your creditors will report the results to the major reporting bureaus as debt settled. This tag can affect your score by lowering it because other potential lenders will see that you settled your debts for less than you owed and this sends a signal to them that you cannot manage your debts on your own..."
The way to solve this dilemma is immediately after the consolidation and once your obligations have been paid in full, to begin slowly reestablishing your credit. You can often do this with a secured card, one where you open up a bank account and deposit funds to match your card limit. Unsecured card companies may not be so willing to issue you credit if you have a poor rating and have just come out of a consolidation. So the secured card option may be best for you.
What the issuing bank does is use your deposit with them as collateral in case you default on the card. Your credit report however will not show that the card is secured and it will be reported as a regular card to the bureaus. With on time payments each month and staying within your limit, the bank may eventually release the card to you as unsecured and give you your deposit back.
"...Building credit takes time and patience and due diligence when it comes to making the payments on time. Try if you can to pay the bill before the due date to avoid any delays. Sign up for automatic payments to make the process more simplified and easier on you. With automatic payments the money will be withdrawn from your bank account on the due date and you can eliminate any chance of not paying your bill on time. Remember that credit is a privilege and is not to be abused or it will affect you when you want to make larger purchases in the future..." added A. Lillo.
Further information about trusted and reputable companies for debt consolidation by visiting; http://www.ReputableDebtConsolidationCompanies.com