A Debt Management Program and Your Credit
A debt management program is an effective and efficient way to pay off your debt once and for all
Credit scores have an undeniable impact on our lives. They are a part of buying a house, getting a loan and, sometimes, the job interview process. So, our clients always want to know how getting out of debt using a debt management program will affect their credit. It’s a fair question, and one that will be answered below.
But first, debt is a very personal issue with different aspects to it for each individual. A solution that is right for your neighbour may not be right for you. So, it’s important to speak to a trained professional before you decide upon a debt solution. Luckily, our counsellors are just a phone call away. Call to get your free debt and budget evaluation. Or, you can also take the first step online by completing a request for a Free Debt Analysis.
No more penalties
A debt management program can help fix some major problems affecting your credit that may also be costing you additional fees. Many people who struggle with debt have credit reports and monthly statements that are littered with penalties for things like late payments, missed payments, and over limit fees. As soon as you start your debt management program, those penalties (and any collection calls) are going to stop and you can start working on repairing your credit score. You’ll be making payments every month and ultimately pay your debt in full. As a result, your credit report will start looking better after you have completed the program.
Improving 2 factors that determine your credit score
Many people are unaware of exactly how their credit score is calculated. Here’s a quick breakdown of the five factors that determine it and then we’ll get to how a debt management program will improve it:
- payment history (35%)
- amount of debt owed (30%)
- how long you’ve been using credit (15%)
- the types of credit you use (10%)
- new credit applications (10%)
If you are already behind on payments, a debt management program is going to do two things. First, it will ensure you make your payments in full and on time, which will begin the process of improving your payment history – the largest factor that determines your credit score. Secondly, you’re going to be systematically reducing the amount of debt you owe – the second largest factor that determines your credit score. In the end, improving those two factors will help improve your credit because they make up 65% of the total score.
Everyone’s credit report is different. If you had excellent credit prior to starting a debt management program, you may experience an impact on your credit score. For someone else, their credit score may have already experienced a drop as a result of their reliance on debt. Regardless of the situation, a debt management program is an effective and efficient way to help you pay off your debt and get you back on track with your finances.
Are You Ready To Get Started?
If you need debt relief, you don’t want to wait around to find the right solution. The longer you wait to address a debt problem, the more likely it is that your financial distress will have a negative impact on your credit. Call Consolidated Credit today at or take the first step online with a request for a Free Debt Analysis.