A key component in learning how to fix your credit is properly managing your existing debt.
You do not have to enroll in an official Debt Management Plan to successfully pay off your balances. Often, these programs arrange for your creditors to accept reduced payments. In fact, enrolling in a Debt Management Plan (DMP) could lower your credit rating even further.
On the other hand, designing and implementing your own debt management plan will help you build skills that will benefit you for life. National Credit Education Services [NCES] will help you every step of the way.
The first step in developing your debt management plan is to break down the types of credit you have and to understand how each can be managed.
Common examples of credit include:
2. Students Loans
3. Auto Financing
4. Credit Cards
Each type of credit has different allowances when you are experiencing difficulty making your monthly payments. Student loans can be deferred or re-habilitated. Mortgages, auto loans, and credit cards all have various hardship programs available that you may be able to apply for. By proactively communicating with your creditors and deferring your debt through these allowances, you protect yourself from the negative effects of late or missed payments.
The second step in creating your debt management plan is establishing a budget that allows you to pay your living expenses AND begin to pay down your debts. You may discover it is necessary to work a second job until your financial situation stabilizes. That’s okay. The extra income will be well worth the effort as you begin to see your debts disappear! Once your balances are under control, we can help you challenge your credit report for accuracy. This should help clear your profile of inaccurate and outdated information and improve your credit score. You may then also qualify for debt consolidation loans to reduce your interest rates and make paying off your debts even easier.
Creating a debt management plan takes dedication but it is worth your time. It’s is so rewarding to see your hard work go towards creating a new financial destiny!
For more information or to schedule a free consultation, contact us TODAY at (770) 952-5168!