How To Improve Your Credit By Achieving Debt Relief

0 Flares Twitter 0 Facebook 0 Pin It Share 0 StumbleUpon 0 Email -- Filament.io 0 Flares ×

Handling our finances can be a stressful process, especially if we don’t have a good grasp on proper financial practice, and proper spending behavior. However, it’s not too late to learn about the benefits of achieving debt relief, aside from the fact that it does make our debts go away. That’s right, achieving “debt relief” is not just a status that means we don’t have any debt. It can actually help us improve on a lot of things, such as our credit.

Why Take Note of Credit?

Your credit, summarized by your credit report and in turn your credit score, is an overview of your finances. In countries like the United States, there are various credit bureaus that take the initiative to compile various statistics about your credits and let you know about your credit rating. These bureaus offer these reports once a year for free.

 

  • Credit scores ranges have values from 300 to 850, and majority of citizens in countries fall on the middle. The good thing is getting above the low-level credit scores is not exactly hard, but maintaining good rating is a challenge.

 

  • Credit scores matter because these are one of the main things institutions will look at whenever you apply for loans, or for a credit card. It’s important that get a good overview of your finances before making any big financial moves.

As such, raising your credit is an important aspect of financial stability. Did you know, however, that achieving debt relief is a good way of increasing your credit?

Debt Repayment Shows Promise

If you slowly show credit bureaus and your lenders that you are capable of making your monthly repayments, and you are actually working towards repaying your debt, then it’s a good show of faith on your part. This can be reflected positively in your credit reports in the future.

Debt Settlement Can Help

If you think repaying your debt the normal way is a bit difficult, then perhaps debt settlement can be a good debt relief tool. It has a relatively “milder” effect on your overall credit score, even if there’s a guarantee that it will drop. You can find a good option here.

  • If you started with a high credit score and you apply for debt settlement, you will drop in points much farther than those with low credit.
  • However, the drop you will experience is not permanent. This is simply a temporary setback for you to be able to carefully assess your financial plans and work towards rebuilding your score.
  • In fact, there are more opportunities to get better credit through proper practices from a debt settlement, because you start from the bottom without actually suffering from too much changes in your actual resources. Think of it as a status change, but you still have your resources to use. How you use them  to rebuild your credit is up to you.

Bankruptcy Can Be An Option

Bankruptcy can be a daunting word to hear because of its implications, but it can be an extremely efficient debt relief tool when used properly. When you file for a bankruptcy, your assets may now fall on the hands of a trustee appointed by the court. Since creditors can now get your assets, you may literally start from scratch.

  • This is good if you really plan on “starting fresh” with a clean slate. However, do take note that bankruptcy tends to stay in your reports for as long as a decade, so you should not pursue this until you are really set on doing this.
  • Your credit score will take a huge hit if you declare bankruptcy, and the rate of drop on your credit depends on its status pre-bankruptcy. Like debt settlement, this also gives you opportunity to start rebuilding your credit the way you like it.

Remember: You Have to Climb Back Up

Sometimes, the best option when it comes to improving your credit is to start from scratch, especially if you are finding it harder to manage your finances because of many variables. Any of these options will undoubtedly make your credit suffer for a bit, but if you have the patience and the right plan, then you can get back to a good rating in no time. The key here is management and good planning.

Conclusion

Debt relief in itself can appear overwhelming, especially when we know that we have to do a lot of sacrifices on our end before we could achieve it. However, realizing the impact debt relief could have to our credit might explain some of the pressure we can experience when people say we have to pay off our debts no matter what. Hopefully, the key tips above on how to improve your credit by achieving debt relief can help explain and elaborate on the key benefits a tab clear of debt can be your friend.

Comments

  1. I just started learning the inside track on credit and how to keep it where it should be

  2. Shannon Pickin says:

    Great advices!

Leave a Reply