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.
When it comes to choosing a financial institution to work with, people always want to choose the best. The problem is that there isn't a best, as it's a matter of opinion. There are many institutions that will work with you, but what you need and what the companies offer will vary widely. The best bet is to find a financial institution that can provide the services you need, and work with you in a manner that you are comfortable with. However, there are a few things that wouldn't hurt a potential borrower to know or consider.
More people qualify for debt consolidation loans than they realize, and the process to get one is not complicated. There are many benefits associated with getting a debt consolidation loan, the most obvious being the instant closing of past accounts. Creditors and bill collectors will quit harassing the borrower at home and work, and quit sending him or her hate mail. Another benefit is that the borrower will have a greatly simplified repayment process. Rather than paying each individual creditor, the borrower only needs to repay one party. Another benefit is the effect on a borrower's credit score. Initially it make take a small hit for closing so many accounts at once, but it will rapidly increase by having only one open account that is consistently paid in full and on time. Rises of 35 to 100 points within a month of getting a consolidation loan are not uncommon.
Bankruptcy and debt consolidation loans aren't the only options. Another option involves paying down your newest bills first, working on them until they are in good standing. For example, an individual might have two credit cards which are both maxed out. One of these cards is from several years ago, and the other is just a few months old. By paying off the newest card first, and eventually closing it out, the borrower would suffer a small credit hit but reduce his overall monthly payments. After this is complete, the borrower would begin to pay off the older, long-standing account. Getting the older account back to a positive working account will improve his credit score, while also reducing the monthly payments.
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.
When it comes to choosing a financial institution to work with, people always want to choose the best. The problem is that there isn't a best, as it's a matter of opinion. There are many institutions that will work with you, but what you need and what the companies offer will vary widely. The best bet is to find a financial institution that can provide the services you need, and work with you in a manner that you are comfortable with. However, there are a few things that wouldn't hurt a potential borrower to know or consider.
More people qualify for debt consolidation loans than they realize, and the process to get one is not complicated. There are many benefits associated with getting a debt consolidation loan, the most obvious being the instant closing of past accounts. Creditors and bill collectors will quit harassing the borrower at home and work, and quit sending him or her hate mail. Another benefit is that the borrower will have a greatly simplified repayment process. Rather than paying each individual creditor, the borrower only needs to repay one party. Another benefit is the effect on a borrower's credit score. Initially it make take a small hit for closing so many accounts at once, but it will rapidly increase by having only one open account that is consistently paid in full and on time. Rises of 35 to 100 points within a month of getting a consolidation loan are not uncommon.
Bankruptcy and debt consolidation loans aren't the only options. Another option involves paying down your newest bills first, working on them until they are in good standing. For example, an individual might have two credit cards which are both maxed out. One of these cards is from several years ago, and the other is just a few months old. By paying off the newest card first, and eventually closing it out, the borrower would suffer a small credit hit but reduce his overall monthly payments. After this is complete, the borrower would begin to pay off the older, long-standing account. Getting the older account back to a positive working account will improve his credit score, while also reducing the monthly payments.
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