Choosing the best time to consolidate debts depends on many factors.
Although debt consolidation companies are very effective, many consumers
are hesitant to receive help for managing their debts. Besides, if
using a debt management service, some creditors will report third party
assistance on your credit report. If this information is included on your
reports, other lenders may consider you a risk.
Knowing When to Consolidate
Although using a bill consolidation company may be slightly damaging to
your credit score, the long-term effects of having a negative credit
rating are worse. Thus, if your debts are getting out of control, a debt
consolidation may be a way to avoid bad credit. Even if your credit
score has already declined, a debt consolidation company can help raise
credit rating. If contemplating a debt consolidation, look for three
signs.
Finance Charges and Late Fees Exceed Credit Limit
Keeping credit cards at the maximum limit can become a serious problem
very quickly. A high balance credit card equals a higher monthly
payment. When unable to pay the minimum, some consumers stop paying creditors
altogether. However, just because the account is maxed-out does not
mean that creditors will no longer charge fees.
To avoid a snowballing effect, continue making credit card payments,
and never go over your limit. By exceeding a credit limit, additional
fees are applied. In turn, you are stuck paying late fees, finance fees,
and over-the-limit fees.
Harassing Phone Call from Creditors
If you do not submit regular monthly payments to creditors, expect
several phone calls throughout the day. Unfortunately, creditors have a
right to call homes when attempting to collect a debt. Thus, registering
with the national "do not call registry" will not stop harassing phone
calls.
If creditors begin to call, the only way to stop the phone from ringing
is to setup a payment arrangement. However, if payment is not received
by the arranged date, the creditor calls will continue.
Unable to Afford the Minimum Payments
Understandably, the majority of people want to handle their debts
themselves. However, if you have too much credit card debts, it may become
difficult to afford the minimum monthly payments. In this case, a debt
consolidation and bill company is necessary. Because these agencies
negotiate lower interest rates, monthly payments become more affordable.
Carrie Reeder is the owner of http://www.abcloanguide.com. View her recommended sources for bill consolidation options.
View her recommended debt consolidation lenders online. Also, view her recommended lenders for mortgage refinancing to consolidate debt.
