Want to Settle Your Debt? Know Your Options..

There aren’t many of us who would like to add more debt onto our plates. Debt is not exactly a big commodity. No one wants unaffordable amounts of debt.

It is not uncommon for many consumers to have a very low credit score. Many have a credit score of under 620 and this has a debilitating effect on their personal finances. While a 40% pay rise or winning the lottery may help improve one’s finances in the short-term, it will not do much to fund one’s long-term prospects.

Your credit score shows the strength of your purchasing power and improving your score is critical. The interest rate the bank or building society offers you is linked to your credit score, which will determine what type of car you can buy, and what type of house you would be able to live in. If you have a low credit rating you might not get a very advantageous offer from the bank or building society, as a good credit score symbolizes power. This is why it is a smart strategy to spend some time repairing one’s credit rating should that help to purchase the smart SUV or the holiday home in Bali.

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Debt consolidation loans have become one of the most popular ways for people to get rid of their personal finance demons. Not all financial institutions are equal so it follows that not all debt service organisations are equal. If you do find the right debt consolidation company, your credit score could be much repaired.

It is a well-known fact that paying one’s debts via a debt consolidation company’s loan should boost your score. Read through our five steps that will give you advice and it will help you decide on whether debt consolidation is for you.

  1. Order a copy of your credit report

Review your credit report before you apply for a debt consolidation loan. It is amazing when one realises just how easily a credit score can be stained by false information. There are companies that can give you a complimentary credit report.

  1. Calculate your bill to monthly income ratio

This is the second step towards determining if a monthly budget versus debt consolidation would help your situation. Should the total amounts of your bills exceed fifty per cent of your monthly salary, debt consolidation is a sure fire way to raise your credit score.

  1. Know which bills you can afford to pay

Credit bureaus receive up-to-date information on consumers’ bills and their payment behavior. Most people make the mistake to believe that by paying only the minimal installment due they will receive a favorable credit score. It’s best to pay off bills entirely.

This is a perfect example of how a debt consolidation firm could help improve a consumer’s rating. Besides paying bills on a timely basis, you should try to pay off as much of the debt as possible. This will help you to raise your credit score and help you to rebuild your credit rating.

  1. Pay bills promptly

A fantastic way to get financial and lending institutions to evaluate you in a good light, and to receive credit from them, is to maintain low debt balances on your credit cards. They measure the gap between what credit is available, and how much of that credit you have used. If the gap is wide, the chance of receiving credit at a lower interest rate is significantly higher than otherwise.

Debt consolidation is a quick solution to most of these problems and certain debt consolidation companies could negotiate to have the interest rates waived. This could mean a faster repayment of the bill and a faster strengthening of the consumer’s credit rating.

  1. A debt consolidation loan could help you to avoid bankruptcy

Bankruptcy should be your last stop in attempting to repair your tattered financial reputation. It may look like an easy way out, but it will trash any credit score.

Debt consolidation loans could be a rapid way to get out of debt. all debts can be paid off, so a credit score can easily be elevated. Credit worthiness impacts one’s buying power so consolidating debts via a loan is a very smart way to beef up your credit score.