Anyone who has ever found themselves deep in debt understands the crushing debilitating weight it can place on a person’s life. When the debt collection agencies are hounding you and your wages are being garnished, all you can think about is how can you possibly get out from under all that debt. You are probably wondering which debts to pay off first? Do you pay off a little at a time or save up and pay of an entire debt at once. You may be working with a credit counselor or debt settlement agency. You may even have considered consulting a bankruptcy attorney.
Whatever your financial situation and regardless of your plan of attack, there is one step that everyone should take, and that’s finding out your credit score. Here are three reasons you can’t succeed without it.
A starting point
It’s a natural tendency to underestimate how much money we owe. If you owe money to many creditors, it’s even possible that you have forgotten about a debt altogether. Fortunately, you can get a list of your creditors and what you owe the by obtaining your credit report. There are a number of free services that will send you your credit report. Without your credit report you have no starting point from which to start getting out of debt. But with credit report in hand, you can have a clear picture of where you stand and what you will need to do.
Understand how your debt affects your score
One of the things that credit reporting agencies take into account is your debt usage. Many mistakenly think that as long as they’re making the minimum monthly payments, their credit score will be high. But if your balances are close to your credit limits, it can negatively affect your score. By knowing your score you can better make a decision about which debt relief options might work for you and how they will affect your credit score.
Track your progress
Finally, knowing your score allows you to track your progress. If you aren’t regularly checking your credit score, you can’t possibly know how well your debt repayment efforts are working. Seeing your score rise steadily gives you the encouragement to keep working at it.
Remember that every person’s financial situation is different. No single strategy will be the best for everyone. In some cases, bankruptcy may be the best choice. Though it will negatively affect your credit score, it can also eliminate some or all of your debt. A consultation with a bankruptcy attorney will help you determine which options will work for your situation.
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Source:
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