Impact of Debt Solution on Credit Score: Good for the Long Haul

30 Jul

Beginning a debt solution might be the perfect way for you to take control of your debts, but the knock-on effect could be a considerably damaged credit score, isn’t it? So do you ever think of it, if you go on a debt solution, could it refrain you from ever borrowing again? The fact is though a debt solution will have a negative effect on your credit history; it could also put you on the right path to enhancing it again, too. Here’s the crux.

What is Credit History?

Your credit story is the big picture of your financial life over the period of last 72 months. It also shows all your credit agreements, and whether you have paid them on time and in full, or if you have any missed, partial or late payments. Every month, a new month is added to the credit history and the oldest is removed; therefore it changes 12 times a year.

When you apply for credit, lenders use your credit history as a parameter to decide whether to lend the money or not.

Impact of Debt Solution on Credit History

Though a debt solution might have a negative effect on your credit history, it could also be the foundation of your improving credit score. Remember, if you are consulting a debt advisory center because you have already missed payments (CCJs and defaults against you), it will already be recorded in your credit history and will have your credit score damaged. But still, your prime focus should be on getting your existing debts under control. Debt advice line guides you to tap ‘reset’ on your finances by enabling you to repay your problem debts. Then slowly and gradually, you can focus on rebuilding your credit score so that you don’t have any problem borrowing again in future.

Life free from Debts

Once your debt solution comes to an end, you can focus on revamping your damaged credit history. At the end of your solution, your lenders will mark your debts as settled and then, if you are patient and watchful, your credit history will improve over time and you will be able to borrow again, just like before. There are various steps you can undertake during your debt solution program, and continue once it is complete, to enhance your credit score, like:

  • Check your credit report regularly – Doing this will help you rectify any misinformation or inaccuracies no sooner they appear.
  • Get registered on Electoral Role – It will help the future lenders validate your personal information whether it is correct or not.
  • Paying bills on time – Bills like gas bill, electric and mobile phone bill will appear on your credit report, depending on how you pay them every month.

So if you think you are struggling to repay your debts, do not hesitate to consult a debt advisory center. Get access to debt solution that is particularly tailored to your financial situation, so that you get the right advice at the right moment.

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