Getting out of debt can feel like an uphill struggle. Indeed, when people are in debt they often feel like they are on a slippery slope due to the interest and others fees that accrue on overdue payments. The challenge is that once you start missing a few payments, your financial position can quickly go downhill, which means that so can your credit history!
It’s therefore understandable that people in debt wish to bury their head in the sand due to the emotional overwhelm that people face – where they often don’t know where to start. A good starting point, of course, is the money advice service that offers free and impartial advice on how to get out of debt.
This article looks at why consolidating your debt by remortgaging your property or getting a specific debt consolidation loan might be a good strategy to reduce your stress, rebuild your credit rating, and get out of debt in the long term.
There are many people that feel they might not be able to remortgage their property due to adverse credit, however, there are plenty of solutions that are specially designed to serve those that are plagued with a poor credit.
See, for most people, having debt in itself, isn’t the thing that is stressful – because debt that is managed well is an asset in terms of one’s credit history.
The stress tends to come from the debt collection activities that companies engage in when people fall behind and the constant fear about what could happen next — it’s the phone calls, the threat of a ‘home visit’, being pursued in court, and even the prospect of bailiffs coming into your home to remove personal items of value.
Being pursued for debt can be an extremely stressful situation, and often times when people are in a serious financial position they are pursued by multiple creditors with multiple streams of debt collection activity; which compounds and spirals to such an extent many choose to then bury their heads in the sand by not opening letters, avoiding phone calls, and detaching from the situation. However, when it comes to debt avoidance really isn’t the best strategy – it can provide temporary relief but it isn’t a long-term solution!
The prospect of consolidating your debt into one larger amount in order to pay off the smaller bits of debt you have offers immediate and permanent relief from the multitude of creditors that might be banging at your door… it repairs your credit rating in the sense that you are no longer making several missed payments each month… and presuming you keep on top of the new monthly payment for the consolidation loan, it will actually start to rebuild your credit score.
The core benefits of consolidating your debt, aside from the obvious financial benefits of avoiding late charges being applied, is that you are now dealing with one creditor rather than several – and rather than having a number of debts with late payments (which can seriously affect your credit score) you now have one debt with payments that are being made on time.
In short, remortgaging your property or getting a specific loan as a strategy to consolidate your debt into one manageable monthly payment is one of the best ways to get back on track; as it can give you some breathing room to get back on your feet and seriously reduce the negative impact on your credit report.
Here are three fundamental principles that will help you take charge of your credit record and consider whether consolidating your debt is the right move for you to make.
- WHERE ARE THINGS NOW
The first step is to check your credit report, and if your score is less than desirable then you are in the empowered position to take immediate action to start repairing your credit score. The first thing is to check for errors; some credit reports contain many errors due to simple administrative error or complex issues such as identity fraud; be sure to check there are no late payments incorrectly listed for any accounts and dispute any errors you do find with the credit bureau.
- GET BACK ON TRACK
If you have missed payments, then stop worrying about this – the damage is done – all you have control over is the current moment which will directly affect what happens next; and the best thing you can do moving forward is to ensure your bills are paid on time. Sometimes, borrowing money can be a justifiable and viable way to consolidate your debts and get back on track.
The trick is to get back on track by getting up to date with your bills, even if that involves negotiating payment terms so that no further damage is done to your credit file – and then stay on track. If you have a few red crosses, then the remedy to that is to create many more green ticks; there is no remedy in burying your head and letting things spiral no matter how tempting it may feel.
It’s important to be mindful of the steps you need to take before borrowing, but one of the most important steps in rebuilding your credit history is actually getting credit. There are many financial products available from specialist companies such as Jubilee Financial Services that can help people in financial difficulty to consolidate their debt into one manageable monthly amount – even those with poor credit records.
In short, getting a loan or even a remortgage, as a strategy to consolidate your debt into one manageable monthly payment is one of the best ways to start repairing your credit record; for as long as you are in the financial position to keep up with the repayments it can give you some breathing room to get back on your feet and reduce the negative impact late payments on multiple bills would have on your credit report.