How Will Settlement Affect My Credit?

Settling for lesser than the amount owed on a credit card might leave a
smudge on your credit report. However, a smudge is much better than the big
old smear that would appear if you defaulted completely and the credit
company wrote your debt off. So, if you are over your head in debt and need
some help, yet don't want to ruin your credit, then consider credit card
settlement.
What is a Debt Consolidation Loan?

A debt consolidation loan is like any other loan except for the fact that it
is designed to help you pay off debt and consolidate it into one payment and
one lender. This has many benefits for the individual in debt and it is
really a great way to get on top of that debt that has been causing you so
many headaches.

Where to Apply?
The majority of financial institutions offer debt consolidation loans. This
includes banks, credit unions, finance companies, and other types of
lenders. Once you have applied at one of these places for a debt
consolidation loan you will receive either an approval of the loan or a
denial. The better your credit the better chances you will receive the debt
consolidation loan.

What if I have Bad Credit?
If you have bad credit you can still apply for a debt consolidation loan.
However, you will want to do so with a finance company or bank that works
specifically with individuals who have bad credit. You will find many times
the terms to be higher and stricter than if you had good credit, but there
are options for individuals with bad credit who are interested.

What Next?
After you receive your debt consolidation loan you will need to pay off all
of your debt. This is basically transferring a bunch of small to medium
sized debts to one larger combined one.
However, the benefit is that you will only be required to make one monthly
pay and it will be less than the combined payments for the other debts you
were making before.

What NOT to do
Once you have received your debt consolidation loan and begun paying it back
you might feel like you have your debt under control again. This might make
you feel like using one of those credit cards that has a balance of zero.
However, this is the biggest mistake you can make. When you get a
consolidation loan you need to focus on paying it off and not engaging in
the same activity that got you into debt in the first place. So, cut up
those credit cards, store them in a safety deposit box, or just hide them
from yourself. You don't want to close your accounts because that will hurt
your credit, but you absolutely do not want to use your credit again unless
there is a MAJOR emergency that cannot be taken care of in any other way.

If you follow these tips and suggestions you will find yourself debt free
before too long and better able to control your spending. This is important
for financial freedom and it simply takes dedication and personal control.
You can do it if you really want to, so just make getting out of debt and
staying that way a priority!

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