There are a few different ways to handle your outstanding debts and recover from payday loans; however, not all of them keep your credit score in mind. Although the solution you choose will depend on your outstanding balances, the terms of your loans, and your current income, a debt relief program will always be a strong solution to consider. These programs equip borrowers with long-term plans to conquer their debt and readjust their financial reports, but they affect credit in a few different ways.
The Benefits of Debt Relief Programs
When you’re facing piling amounts of debt, some serious changes have to happen to your financial situation, which can both negatively and positively affect your credit score. Initially, your score may drop with a debt relief program because certain accounts may close while others might have to remain idle for a few payment periods. However, these plans can build credit over time with strong financial adjustments.
There’s no guarantee how much your score will rise or fall with a debt relief program, but you can count on certified counselors to provide you with a range of effective financial options. Counselors can negotiate with your creditors to draft the best terms of agreement for your approval. This helps to prevent your debt from growing and provides you with a strong path to financial recovery. Similarly, a debt relief program dissuades you from opening new lines of credit, which positively impacts your score. With a debt relief program, your balances will slowly deteriorate, which also plays a part in raising your score over time.
Bankruptcy Verses Debt Relief
Although there are many benefits to enrolling in a debt relief program, there are other alternatives to consider on your road to financial freedom. One of the most common options among the worst debt situations is bankruptcy. Bankruptcy is a strong option for those in dire financial crisis, but it also has a lot of drawbacks to weigh against those of a debt relief program.
It takes much longer to recover your credit score from the damages of bankruptcy than from a debt relief program. And, because the potential credit drop is significantly higher when you file for bankruptcy, you can make strong financial decisions for years and still struggle to see significant progress with your credit score.
Financial Freedom with Debt Relief Programs
Although debt relief programs are a favorable alternative to bankruptcy, there are still pros and cons to consider. The financial counselors at Progressive Debt Relief weigh the options with every move in your debt relief program and provide honest feedback that encourages the best decisions. Even if you decide to handle your debt by yourself, we can equip you with the tools to get started. If you’re ready to make long-term steps to improving your debt situation, call us for a free consultation at 1-877-590-1847.
