Worried about consolidating debt without hurting your score? Explore how to get out of credit card debt without ruining your credit
The average American carries an average credit card debt of about $6,200.
While this is nothing compared to other kinds of credit, such as the average student debt, credit card debt can still ruin your financial life. For starters, if you slack on settling your balances, the credit company will roll over the amount and apply a fine. Your credit score will also start falling.
In this economy, bad or poor credit is the last thing you need.
So, is it possible to clear your debt without hurting your score? Yes!
Here’s how to get out of credit card debt without ruining your credit.
Don’t Let Your Credit Card Debt Go into Collections
Settling your credit card balances late will harm your credit, but the drop will be marginal, as long as you don’t make it a habit. Missing your payments for about three months and letting the debt go into collections is the one thing that will give your score a major knock. Bear in mind collection accounts remain on your credit report for seven years.
As such, the first step to getting out credit card debt without hurting your credit score is to ensure it doesn’t go into collections. If it goes, you’ll only make the rebuilding process much harder.
Negotiate for an Extension/Alternative Payment Plan
When you apply for credit, you’ll be approved for a limit that’s within your financial range.
However, financial situations change. You could lose your job. Your business could fail… Generally, anything that lowers your income is enough to render you unable to settle your credit card balances.
When this happens, be proactive. Instead of waiting and hoping that your situation improves so you can settle the balance, reach out to the lender and request for an extension. Most credit card companies now have debt management programs for credit cardholders who’re in financial distress.
If you secure an extension or a payment plan that suits your current financial needs, you’ll be able to prevent the debt from going into collections and ruining your credit.
Consider Using a Bad Credit Loan to Pay Off Your Credit Card Debt
There are instances when it might not be possible to get an extension or alternative payment plan from your credit card lenders.
Don’t worry, you aren’t out of options yet.
You could go in for a bad credit loan and secure the funds you need to clear the credit card debt. This article from Captain Cash explains how to get loans when you have bad credit.
Here’s the thing with bad credit loans. Lenders don’t typically make hard credit inquiries. This means your credit score won’t suffer any more negative damage because you’re applying for a loan. Ordinarily, applying for a loan from a traditional lender lowers your score because they make hard inquires, which show up on your report.
That’s How to Get Out of Credit Card Debt Without Ruining Your Credit
Being in debt isn’t a situation you want to find yourself in. Especially if your credit cards are charging exorbitant rates, you’ll easily owe a lot of money within a short time.
The good news is this isn’t a life sentence. You can climb out of while persevering your credit. Just follow this guide on how to get out of credit card debt without ruining your credit.
Stay tuned to our blog for more money and credit tips.