Is Getting Out of Debt a Worthy Goal?
The American economy has been suffering for almost 12 years, and this has caused millions of people to deal with a long list of financial issues, including lower wages, home foreclosure and extended periods of unemployment. When you combine this with the fact that many people had an unimaginably high debt to income ratio, it is not surprising that the nationwide credit score average has slipped by as much as six points each year since 2009. According to the Federal Reserve, Americans owe $2.43 trillion in consumer debt, and the average household has almost $16,000 in credit card debt alone.
What are the Consequences of a Bad Credit Score?
Many people assume that letting their credit card payment slide will only impact their future ability to use and obtain credit cards, but this is inaccurate. In fact, your credit score is utilized by everyone from your car insurance provider to potential employers. Therefore, if your score was damaged due to losing your job or your home, it is important to take the necessary steps to rebuild it. After all, having a low credit score can make your car insurance premiums go up, and it can also even block you from obtaining future employment opportunities, especially if you work in a financial field.
What about Everyone Else’s Score?
Many Americans have allowed themselves to be content to carry unresolved debt and a lower credit score because they believe that everyone else has the same problem. Although the impact of the recession did cause damage nationwide, there are still millions of people who have been able to maintain a solid credit score. Because of this, you will always face other job candidates who have a better credit history, and you will also continue to deal with creditors who call you on a daily basis in an attempt to collect the money that you owe.
How Can I Begin to Find My Way Out of Debt?
Most Americans live paycheck to paycheck, and that can make it seem impossible to get back on the right path if you miss even one set of payment to all of your credit cards. However, there are several resources available to help you, including debt counseling and credit score repair agencies. You can also contact each of your creditors individually and discuss the issue with them. As long as you have not let too much time pass, they will most likely be willing to assist you by waiving late fees for a couple of months, and they may also temporarily freeze your interest rate if you enter in a payment arrangement with them.
What if I Still Cannot Afford Monthly Payments?
Rather than give up entirely and let your credit score be obliterated, you should definitely contact a debt counseling service to discuss your options. In most cases, they can help you work out a plan with your creditors that will enable you to make smaller monthly payments until you get back on your feet. As an added bonus, a debt counselor can also provide you with the necessary tools to help your prevent yourself from falling into debt again in the future.
Even if it feels hopeless, it is always important to take control of your debt. After all, if you ignore it, you risk having your items repossessed or losing out on a great job opportunity and paying even more for car insurance. By discussing your situation with a debt counseling service you can begin the process of digging out of the financial hole.
Freelance author Catherine Stephens is a small business consultant and offers this discussion on the importance of making an effort to clean up your credit. DebtPayPro offers highly specialized credit repair and debt negotiation software, to help servicing agencies manage the heavy workflow and document management inherent in this field. Their unique CRM platform handles the whole process from beginning to end, providing an accurate and money-saving end result.
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