Debt Eraser: Best Five Ways to Resolve Your Credit Problems

Wednesday, February 12, 2014, 1:00 AM | Leave Comment

Credit cards and other debt is often the main financial lifeline for most consumers. At some point, you may feel that the payments you make on your debt are not really helping to reduce it, and you would like to know how to resolve your credit problems. Here are five ways that will help.

Debt Eraser, Best Five Ways to Resolve Your Credit Problems

  1. Check Credit Rating

    Make sure your credit rating is accurate. Credit agencies send your credit history to two main credit reference agencies, and they can make mistakes.

    You can ask for a free investigation and dispute any negative information that you believe is inaccurate or incomplete. This approach may take a little time, but the potential benefits can be huge. Invest the energy to see if your score really reflects your history.

  2. Fixed-Rate Loan

    Get a fixed-rate loan and pay off your high interest debt. This may seem like just going into more debt, but it will help you pay off your debt faster and may reduce your monthly payments. You must be sure you are able to repay the loan.

    A fixed-rate loan usually has a lower interest rate, so this way to consolidate bills is often a great option to both save money in the long run and have more every month for everyday needs.

    Make sure that the rate of this loan is lower than those bills you are paying with this account, however, or you are defeating one main reason for consolidating.

  3. Ask for a Lower Interest Rate

    If you can’t negotiate yourself, get help. Getting help from a reputable consumer proposal agency such as Paddon & Yorke Inc in Toronto may get you more than a lower interest rate. They will work with your creditors for you and find the least painful solution.

    It is best to be up to date with your payments when you make this request. Credit card companies and other lenders are often willing to negotiate with you, if they see that you are committed to repaying your debt. With a lower interest rate, you will begin to repay your loan faster, and save a lot of money in interest payment too.

  4. Investigate DMPs

    Ask your counselor about a Debt Management Program (DMP). A credit counseling organization will help you consolidate your debts into one lower payment. In this way, you don’t have to borrow money to get out of debt. You’ll get a realistic budget and advice on how to stick to it.

    Make sure you pay attention to the interest rate of these consolidated bills beforehand, however. You will only make one payment a month, but the consolidated amount that you owe could mean how much is going to your interest is more than you think.

  5. Debt Settlement Programs

    Ask about a debt settlement program. Your adviser will offer your creditors a lump sum to settle your unsecured debt. This will usually be much less than you actually owe. If you need legal help in resolving your credit problems, there are two options: Consumer Proposal and Bankruptcy.

    The consumer proposal is a legal contract that you will repay your debt within five years. Filing for bankruptcy means you are insolvent and have no assets to sell to repay your debts.

Before you decide which steps to take to resolve your credit problems, it is wise to consult a certified credit counselor who can explain all of your options and help you select the best one for your unique financial situation.

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