Debt Consolidation

How Do Credit Card Debt Consolidation Services Affect Your Credit?

Credit card debt consolidation services have been very popular among those who are struggling with their nasty credit card debts. The main problem with these debts is that they grow very fast because of the high rate of interest lenders charge on it. As compared to other conventional lending programs, the annual percentage rate here is usually much higher. Besides that, many consumers often try to avoid the actual debt by just making the minimum monthly payment required. This way, they achieve temporary relief, as they do not have to work hard on their budget to pay off their entire debt. But, they fail to realize that avoiding the debts temporarily cannot turn out to be a permanent debt relief solution. Very soon, there comes a time when the debts become out of control and they start getting collection calls. Many people even end up getting bankrupt because of it. But, it is very important for you to keep in mind that debt consolidation of credit card debts is always a much better option than bankruptcy. Following is a brief rundown on it.

Effects On Credit

While you are doing your research on the different types of credit card debt consolidation services available in the market, there are several factors that you must take into account. For example, you must know that if it is reported to the credit bureaus that you are using credit counseling services or debt consolidation services, it may have a serious adverse effect on your credit report. In most cases, the negative effects of those entries are no less than the damage a bankruptcy causes to your credit. You are advised to consider hiring a company that is capable enough to convince the lenders not to report the process to the credit bureaus. A reputable credit card debt consolidation company will also negotiate with your lenders, convincing them to waive off penalty charges and reduce the overall burden of debt. Furthermore, it is also important to convince the lenders to report all resulting debt payments as “paid in full”, not as “paid in settlement”. The lenders must also show the debt accounts as current, not as “in collections”. Make sure that the company you are hiring to consolidate your credit card debts can perform all these tasks quite efficiently.

You are also strongly recommended never to pay the fees for credit card debt consolidation services in advance.

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