Thursday, July 8, 2021

Ways to Get Out of Debt When You Have Bad Credits

Having bad credit makes you lose your credibility as well as most people’s trust because people would normally have doubts about you if you’d be able to pay them in time. It also likewise prevents you from being qualified for other debt relief programs such as low-interest debt consolidation and can cost you thousands of bucks because your credit cards tend to go higher due to interest rates as well as interests from both car loans and home loans. You’d find yourself neck-deep with loans that you fear you might land in jail soon because of cases like Estafa. [Read: estafa /eˈstäfə/noun meaning: wrongful or criminal deception intended to result in financial or personal gain; fraud.]

Well, don’t lose faith, there’s still hope. There are debt relief program options for people like you who happen to be overloaded with financial problems. Read on and find out more about how it can help you get out of those debts you’ve made.
Debt and bad credit are very relative because when you accumulate too much debt that means you have bad credit. Sadly, the high interest rate charges of credit cards, car, and home loans as well as rent for housing and utilities are what make people in debt and therefore are the consequences of bad credit. For most people, it becomes a cycle they caught themselves into. It regularly feeds on itself and keeps them from properly managing the control of their finances.

One of the most common ways to rise from a big debt is via debt consolidation. It means taking out one loan and using it off to pay off all your other unsecured debts. The loans make your debt a whole lot simpler in terms of the bill-paying process. It should also make things easier for you because most debt consolidations have lower interest rates with affordable monthly term staggered payments. So while you may go slow in terms of paying off your debts, you can assure those with whom you have debts that you will be able to pay them and settle your debts soon.

When you repay the debt consolidation loan in your chosen staggered payment, depending on the arrangement you have agreed upon with the management, it may take some time for you to change your status from being a bad credit consumer to a good credit consumer.

The truth of the matter is there are a lot of options for people with bad credit or bad credit reputations. But they must bear in mind that there’s a penalty that awaits those who will ignore their bad credit. For one, you will be paying higher interest rates when compared with someone considered to be a good payer.

But like I said early on if you successfully repay the loans you have taken, and regularly keep up with the commitment to pay your debts, your credit score shall improve and the cost for borrowing shall eventually drop.

Check out where to find debit relief when you need them the most:

  • You may start at your bank. If you’ve previously opened a checking or savings account, then it is pretty obvious you used to have a relationship with the bank. 
  • If a bank gives you a personal loan, then you and your bank are on the same page.
  • You can apply as a member of a credit union. Their nonprofit status gives you an advantage. Just follow their membership rules, loan standards, interest rates, and other fees and you’ll be in good hands.
  • You can ask a friend or a relative for a loan. Most Filipino families would do this as their last resort. If you ask me, this could be both: best and worst choice. While it is very convenient to loan money from a relative, you have to be responsible enough to pay your dues in time. If you won’t, be ready for a family squabble. If you don’t pay them at all, then the family ties might be cut and it won’t do you any good. The same thing applies to friends. Be responsible and do this with a business-like approach. It should all be a win-win situation for both parties involved.
  • Try debt consolidation loans. Both credit unions and banks would give you a one-time chance to pay off your credit card debts, be sure to do so that you can maintain a lower interest rate. You have to make sure that the interest rate is lower than what you need to pay on a current statement, otherwise, it’ll only put you in deeper debt.
  • Home equity loan. If you have acquired a home, you could borrow against the equity you have in it. There are many low-interest loans simply because the house serves as collateral. Use it to your advantage.
  • Debt Management Program. If you want to cut your credit card debt, the best way to do is to place your debts in a good debt management program. It will reduce your interest rates while they lower your monthly payment rates in various terms: it could be 36 months, 24 months, 12 months, and 6 months. It will help you pay off your loans in long-term staggered payment.
  • Credit Card Loans. If there’s an emergency you need to attend to, but you know you have the ability to pay it quickly, using your credit card is your best bet. There are offers for you to pay at 0 percent interest that can be a big help.

Now, to make sure you’ll never have to be in such huge debt, here’s what you need to do:
  1. Make on-time payments. Never forget your payment dues because they tend to have higher interest for each delayed payment.
  2. Keep your credit card balances low. Use those plastic credit cards only when you need them. And pay up the balances regularly.
  3. Learn to clean up your credit. Nobody wants to become ‘blacklisted’ for credit card applications etc. You can ask for help with collecting agencies and write a debt dispute letter and explain to them the amount you can pay them.
  4. Bear in mind the negative impact it can bring you if you don’t pay your debts. The information shall be less damaging if you keep your credit obligations in good standing.  On-time payment is the key to getting rid of bad credit labels for good.

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