If you are looking to clean up your credit score, you have a lot of options available to you. There are almost as many options available as there are people looking for them. Some people believe that the only option you have is bankruptcy, but that is simply not the case.
Filing for bankruptcy can really clear up a credit report, but it will start off pretty bad. Bankruptcy will show up on your credit report, and remain there for several years. Banks and other lending institutions tend to deny loans to individuals that have this ding on their report. This includes car loans, mortgages, or any other type of loan. You would clear your debt, essentially wiping your slate clean, and allowing you to rebuild as if you had a fresh financial start.
A debt consolidation loan is given by an agency specializing in them, and the money is directly used to pay off all of the past creditors immediately. This will cause a hit on the individual's credit report for closing so many accounts at once, but is offset by the new line of credit being more payable. The credit report will show that the individual has been making payments to the only loan they have, so in a short time the score begins to rise again. At this point it's possible to once again open new lines of credit.
On the bright side, getting a debt consolidation loan can lead to immediate financial freedom. Using the money to immediately pay back all of the prior creditors, a small ding will show up on a credit report, but is offset by no longer having the same level of debt. The small credit ding is easily remedied by a few months of good behavior on the new line of credit. If the individual filing is already in the middle of settlements, the credit ding could last for about a year. Either way, only taking between a few months and around a year, debt consolidation loans are the quicker, and less drastic option.
Working from the list of potential agencies, the person wanting the loan will need to contact each one. It's also very important to ask the right questions. Does this agency indeed help with debt consolidation loans? If so, is there a threshold that an applicant must reach before being eligible? Following this method, anyone can narrow down which agency is "best" - for them.
Filing for bankruptcy can really clear up a credit report, but it will start off pretty bad. Bankruptcy will show up on your credit report, and remain there for several years. Banks and other lending institutions tend to deny loans to individuals that have this ding on their report. This includes car loans, mortgages, or any other type of loan. You would clear your debt, essentially wiping your slate clean, and allowing you to rebuild as if you had a fresh financial start.
A debt consolidation loan is given by an agency specializing in them, and the money is directly used to pay off all of the past creditors immediately. This will cause a hit on the individual's credit report for closing so many accounts at once, but is offset by the new line of credit being more payable. The credit report will show that the individual has been making payments to the only loan they have, so in a short time the score begins to rise again. At this point it's possible to once again open new lines of credit.
On the bright side, getting a debt consolidation loan can lead to immediate financial freedom. Using the money to immediately pay back all of the prior creditors, a small ding will show up on a credit report, but is offset by no longer having the same level of debt. The small credit ding is easily remedied by a few months of good behavior on the new line of credit. If the individual filing is already in the middle of settlements, the credit ding could last for about a year. Either way, only taking between a few months and around a year, debt consolidation loans are the quicker, and less drastic option.
Working from the list of potential agencies, the person wanting the loan will need to contact each one. It's also very important to ask the right questions. Does this agency indeed help with debt consolidation loans? If so, is there a threshold that an applicant must reach before being eligible? Following this method, anyone can narrow down which agency is "best" - for them.
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