Why getting help from third parties is better for solving your debt problems
Consumer debt is a significant concern for many people. If you find yourself often worry about the amount of debt you carry, then debt consolidation may be the right choice for you. Before considering debt consolidation program, however, it is important to know how to use a debt consolidation or debt settlement company to affect your credit score and report. The first and best place to start your search for debt settlement is to ask for a copy of your credit report from the three major credit reporting agencies. By keeping the initial copy of your credit report and compare it with the latest version, you can ensure that any settlement made in your name correctly recorded as well as your account recorded as paid.
There are many different methods used to help ease the burden of their debt consumers. Many companies prefer to consolidate their consumer debts into a single one, with larger loan. This way can allow consumers to quickly clean up a lot of their debts. Debt settlement could be the ideal solution if you owe large amounts of unsecured credit card debt. Typically, credit cards and medical bills are the two most common settled debts. Often, the larger you owed the higher percentage you can save with a debt settlement. This is because companies prefer to have much reduced amounts which are considered “fully paid” rather than have an account that is constantly late or default. By agreeing on smaller payments, rather than paying in full, you can save a lot, especially in interest and penalties.
Debt consolidation companies would negotiate directly with the company you owed to. However, because the debt was settled for a lesser amount than the debt, the effect of the debt consolidation credit report history will be temporarily negative. While at first glance it may seem your debt paid in full, a more thorough inspection on your credit report will reveal that the debt was settled significantly less than money owed. This way can negatively impact a credit score in the short term, but over time, your score will increase dramatically. Although the exact formula used to calculate credit scores are kept secret, many experts reported that 35 percent of your credit score is determined by the timely regular payment. This method drastically reduces the ratio of debt to income arising on the balance of your credit report, so it makes you more attractive to lenders from time to time. This can make it easier to apply for consumer credit in the form of credit cards, mortgages or lines of credit.
If you feel like you’re in over your head in debt, and you’re looking for help in getting out of debt, it’s often a good idea to allow a third party to negotiate a settlement for you. Because they are not emotionally or financially strapped into your own debt, they could negotiate in good faith for you. Talk with a counselor to begin the process of debt settlement getting out of debt and take control of your financial well-being.