What options do I have to reduce my debt quickly without hurting my credit rating?
What options do I have to reduce my debt quickly without hurting my credit rating? I am not past due, but feel overwhelmed. How do I reduce my debts?
There are many forms of debt relief and ways to answer your question "How Do I Reduce My Debts?" including:
In your case, the only solution that will not impair your credit profile is a debt consolidation loan.
Debt consolidation can benefit you in many ways:
- Monthly cash flow
- Total savings
- Interest deductibility
- Your credit rating
However, not all forms of debt consolidation are the same. You need to consider your specific situation, including if you own or rent your home, your monthly debt to income ratio, and your credit rating. A program like a debt consolidation loan may lower your monthly payment, get you a lower rate than most credit cards, and the interest is tax deductible.
Alternatively, a program like negotiated debt settlement may lower your monthly payment, get you debt free fast, save half of what you owe, but it could negatively impact your credit rating.
These are a few of the considerations. See the Bills.com article How to Reduce Debt Quickly & Effectively if speed is what you need. If you want more in-depth information about your options, read the Debt Solutions: Bills.com White Paper on Debt Solutions.
I hope this information helps you Find. Learn. Save.
Dealing with debt
Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q4 2022 was $16.91 trillion. Housing debt totaled $12.26 trillion and non-housing debt was $4.65 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
Collection and delinquency rates vary by state. For example, in New Mexico, 13% have student loan debt. Of those holding student loan debt, 10% are in default. Auto/retail loan delinquency rate is 6%.
Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.