Debt consolidation and credit counseling are solution options for your debt problems. You can go to a credit counseling service to help negotiate with creditors and manage your bills. Alternatively, you can apply for a debt consolidation loan to lower the interest and the monthly payments you’re paying off to your creditors.
Debt consolidation may have a negative effect on your credit report if you get a loan, because more loans don’t look good on your report. But, as with debt consolidation program, this should be a temporary effect, because your credit score should improve once you have paid off your existing debt and have more available credit.
Debt Consolidation Loan Vs Credit Counseling
Consolidating your debt is something that you can do fairly easily the first time. But it may be difficult if you have a low credit score because you’ve made late payments, defaulted on a loan, or have a charge off on your credit report.
Credit counseling services can help you to navigate the tricky task of dealing with and negotiating with your creditors. They can also help you by paying your bills for you. Here you send them one monthly payment, and they pay your bills. If you often make late payments, this can help in avoiding late payments — especially if you’re finding your debt payments stressful.
However, choosing a credit counseling service can be difficult, as some companies can be more effective than others in negotiating with creditors, and some companies can ruin your credit score by not paying your bills for several months. Many companies will be able to do a good job without having any effect on your credit score.
Alternatively, you may want to apply for a debt consolidation loan. If you own your own home and have equity in it, you can consolidate your debt through a home equity line of credit. Or, you can consolidate through a bank consolidation loan to pay of all of your creditors. A consolidation loan can give you negotiating power.
Many people often find that they can do their own debt consolidation and credit counseling, but this can be a difficult task for people whom have already had trouble with making on time payments or whom have creditors calling them. But this isn’t impossible to do.
At a certain point, you can also do self debt consolidation and credit counseling by getting a loan to repay all of your creditors and then paying off that loan. Once you have the loan you can then start negotiating with your creditors. If you’re good at negotiation, there is a chance that the lenders are willing to cancel some of their charges or interest provided you’re willing to pay off their bill in one lump sum.
Which Debt Consolidation and Credit Counseling Option to Take?
Debt consolidation and credit counseling, each option has its pros and cons. There is no generic answer for you. But no matter what alternative you choose you have to believe in yourself. You have to believe that you can get out of debt by making on time payments on all of your bills.
If your debt is credit card debt, once you have paid off all of your creditors, change your lifestyle by changing the way you use your credit cards.