Do it yourself debt management is a practical debt solution, if you can’t get a loan. You may be unable to get a loan because your credit score is too low. Or, you might not be able to get into a debt management program because you do not have enough debt.
If you’re in such situations, don’t worry. There is a way out. But one thing you should not do is continually applying to different credit counseling services until one accepts you. This puts you at risk of being taken advantage of by a for profit company.
Debt Solution By Improving Credit Score
If your credit score is too low to get a loan, or you don’t have a house, or for some other reason, you cannot consolidate, you may have to wait a few months before trying again to get a loan.
First, you may need to increase your credit score. This will help you to qualify for a loan, as well as allowing you to get lower interest rates. To improve your credit score:
- Pay bills on time: 6 months of on-time bill payments can raise your credit score.
- Don’t automatically close accounts as you pay them off: Part of your credit score is based on how much credit you have available.
- Don’t open new accounts.
As well as improving your credit score, you may want to work on reducing your debt.
Debt Solution By Reducing Your Debt
Debt reduction will also improve your credit score and make it easier for you to consolidate. A popular method to pay off debts is to send minimum payments to all of your debts, and choose one debt — either the smallest amount or the highest interest rate — to send any extra money you get.
Once that one debt you have focused on has been paid off, use the money you were sending to it, and add it to the payment on the next debt on your list. You could also decide not to decrease the amount you send to any debt, even though the minimum payment on a debt will be lower next month. Just keep sending this month’s minimum payment to it until you get it paid off.
Credit card debt, especially, can be difficult to get rid of. The interest on many cards is compounded daily, so you may want to try to send your payments a bit early, if possible.
If you can’t send the payment early, and your credit card company allows multiple payments in one month, send some of the payment early, and the rest on the due date. This helps cut down the amount of interest you have to pay, and in the end you will end up paying less.
Once your debt has gone down and your credit score has gone up, you may be a better candidate for a debt consolidation loan. Of course, by the time you find you are good at self-help debt relief; you may no longer need any help from a debt consolidation company.