Debt consolidation has become a common practice of those wishing to repair credit. While many people have begun to choose this option, there are better ways to repair your credit. So let’s begin by understanding how each method works when it comes to your credit. True debt consolidation means taking out a new loan large enough to repay outstanding debt. You then make monthly payments to pay off the new loan. There are also companies that offer debt consolidation but BEWARE of these companies! These companies tell you to stop paying your accounts, and then they negotiate on the backend with the collection companies and split the profit. This ruins your credit. The only true way to consolidate your debt is by taking out a loan large enough to pay the debts. You could also take out a credit card that offers a free balance transfer with zero interest for a set amount of time. You would then transfer your balances to the new card and at the same time gain some breathing room by being able to pay it back without interest.
Keep in mind that whether you choose a loan or a credit card, you’re applying for new credit, which means a hard inquiry on your credit history. This will cause a dip in your credit score.
Help Through the Process
Another method of repairing credit requires patience but is ultimately a better option by doing it the old fashioned way. Coined DIY in contemporary lingo, credit repair can be achieved without taking on new debt. The first step in repair credit is obtaining your credit reports and credit scores. You are allowed free copies of your credit reports once a year under the Fair Credit Reporting Act.
You can also find an agency that will help you through the process like Good Credit For Life. Next, you get must get an understanding of what is affecting your credit. Credit scores can be broken down into five categories; Payment History, Credit Utilization, Length of Credit History, Types of Credit, and Credit Inquiries. Each category carries its time frame for how long it will take to resolve so don’t expect credit repair to be an overnight process. Also, understand that payment history and credit utilization are the two most important factors so start there.
Once we know what the problem is, it is now time to eliminate them. Start with good habits for any open accounts or lines of credit. Then start working on the old and outstanding debt. You may also have to dispute mistakes on your report which may be the most frustrating part to repair credit. Nonetheless, you’ll be happy you did. Next start some positive credit history. When you speak to Good Credit For Life, we will help you determine what actions you can take that will produce positive credit activity.
Steps to Repair Credit
The steps to repairing credit are about not only cleaning your history but about building good habits that can be maintained over time. We believe that everyone deserves to live the life to which they aspire. Our mission is to help you improve your credit rating through a personalized and holistic approach. Every person should be given a fair opportunity to make a significant purchase, like a home. We believe that your past doesn’t always have to dictate your future. When we help our customers achieve these goals we have set them on a path to life-long success. We help them recognize past financial struggles, manage credit, and give them the tools and education to improve their financial situation and quality of life. With Good Credit For Life, our name is our guarantee!