Is there a point of no return in doing credit history repair?
The story is usually the same. People get credit cards when they’re young. They max them out. They borrow on one to pay the other. They get more cards until they can’t anymore. Finally the minimum payments overwhelm their income and they’re stuck.
Maybe you’ve been through that already. The good news is you still have options. The main credit history repair options are bankruptcy, debt settlement, debt consolidation, credit counseling or learning to manage your debt better.
There’s always the concern regarding how any particular option will affect your credit. While that’s a valid concern, a mountain of debt ruins your credit AND your cash flow. If you don’t do something… anything about the actual debt, it won’t matter how good your credit is.
Bankruptcy is a best for people who don’t have many assets. That way when you have to liquidate your assets, there won’t be much there and most of it will be exempt anyway. That option hurts your credit the most but if you’re drowning in debt, that might be your best option. Consult with an attorney for that.
A great option for people who have too much debt but a steady income is debt settlement. Instead of making your monthly payments, you save that money and offer your creditors lump sum settlements in the range of 20-40% of the total. Be sure to know the laws in your state and get everything in writing. If you have too many assets, your creditors might attempt to sue you or garnish your wages.
To do debt consolidation you get one big loan and to pay off your other loans. It’s typically at a lower interest rate and often a secured loan such as a home equity loan. The trap many people fall in to is that they spend on the accounts they just paid off and end up in twice as much debt as they started with. If your house is collateral, you could end up losing it.
I would never recommend credit counseling. They are paid by the creditors they negotiate with. All they do for the monthly fee they take from you is negotiate your interest rates down. You can do that yourself. They’ll also put a 3rd party intervention mark on your credit which will make it difficult for you to get any more credit in the future. So while you might have wanted to do this option to preserve your credit, it will work against you in the end.
A final option is to manage your spending better. Pay down your highest interest accounts first and negotiate for better rates. If you need to transfer balances to lower rate credit cards, do it. Make one account give you better terms than the other. Once you pay off one, use that payment to accelerate payments on the next until you’re happy with your level of debt.
No situation is hopeless. There are always options. Make a plan that fits your long term goals and take action.
Find out how to do your own credit repair without an agency. Visit www.creditrepairsecrets.org for free credit repair secrets.