Monday, 16 March 2015

Debt management tips

It’s become really hard dealing with credit in the present economic conditions. Your loan application is scrutinized more thoroughly now by lenders and banks. Your credit report is what is used to evaluate your loan application and debt forms a big factor of your report. But managing debt is different for every individual as your debt could be because of different circumstances like job loss, medical etc. You can just follow these basic tips to manage your debt:

Prioritize:
Prioritize your payments; Think of paying off which debt would be beneficial to you. Decide if you want to pay off a smaller debt first or high interest debt first.


Negotiate:
Negotiate with your bank or creditor to lower your interest. Talking to your banks helps you as they cooperate with you for your debt payments.

Debt Consolidation:
If negotiating doesn't work, you could look at consolidating your debt. Debt consolidation is taking one big debt with a lower interest rate or zero interest to pay off all your debts. It helps you as you don’t have to paying off multiple debts but only one debt instalment a month.

Credit Counsellors:
If sometimes you can’t help yourself, credit counsellors can. They help you draw your budget, reduce your spending, negotiate with your banks for lower interest rates. Research well before going to a credit counselling agency, so that you get the best services at the best price.

Settlement/ Bankruptcy:
If you have no other resort left, settlement can be the last option. In cash settlement with your credit or bank, the bank gives you a big discount for paying off your debt by a certain date in cash. If you don’t have cash for a cash settlement, then you may have to declare bankruptcy.

Settlement and Bankruptcy both negatively affect your CIBILscore and stay on your credit report for a long time, so try to follow the above steps and try to never reach the last resort.  

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