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5 Best Ways To Get Out of Debt Quickly
Getting yourself out of debt can seem like a daunting task before you start digging. Here are pros and cons for five ways of erasing debt by National Debt Relief.
The debt relief company begins by discussing how important credit scores have become today. They discussed how this is not only important to people wanting to get a loan; it can also affect other financial and even employment opportunities.
The article notes how debt can really bring down a consumer’s score. Even if they are not late on payments, the company believes that the debt amount itself can affect credit reports negatively. Given the importance of credit scores, consumers are advised to choose a debt solution based on their willingness to sacrifice it.
National Debt Relief divided the four main debt relief solutions into two - depending on their effect on credit scores.
For consumers who wish to protect their credit ranking, they are encouraged to use the following debt relief program:
1. Debt consolidation loan. This program involves a loan that the consumer will use to pay off their multiple debts. The articles states that the credit score will only be affected when the lender pulls out a copy of the consumer’s credit report to see if the loan should be approved. Also it can go down slightly when the loan is added to the total debt amount. However, it will also improve once the loan is used to pay off the multiple debts and the consumer pays the loan diligently.
2. Debt management. This debt relief program involves a credit counselor who will guide the consumer while paying off their debt. The counselor will take an active role in the debt payments so the credit score of the consumer will be well taken care of. The article states that there is no loan here so there will be hardly any effect of the report. Also, the consumer will be kept from using any credit cards they enrolled in the program. This means they will not be in danger of incurring more debt.
The article discusses that although these two will hardly have an effect on the consumer’s credit score, it will take around 5 years before the debts are fully paid off. If they want it to be faster, the article stated that consumers must be willing to sacrifice their credit rating.
The two debt reduction options that has a more negative effect on the credit report are:
3. Debt settlement. This debt solution aims to have a portion of the debt forgiven by proving to the creditor that the consumer is in a financial crisis. To do this, the consumer must default on payments. Late payments are never good for the credit score. Not only that, defaulting will increase the balance of the consumer which further decreases their score.
4. Bankruptcy. The debt relief option that has the worse effect on the credit report is bankruptcy. Whether the debt is discharged or the consumer has to go through a repayment plan, the score of the consumer can go down at least 200 points.
These two can help consumers achieve fast debt relief but at the expense of their credit. However, if the finances of the consumer really requires the debt reduction, then they must sacrifice their scores just to get out of debt. The article claims that credit scores can improve over time and the important issue to solve is the debt problem.
For more information about the services that National Debt Relief provides, contact the company at (888) 606-5535
National Debt Relief