Bad Credit and Debt Management | CCCS of Chattanooga
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Bad Credit and Debt Management

Your credit score has a significant impact on your buying power. When you have bad credit, you end up getting hit with higher interest rates on loans and are less likely to be approved for bigger loans. But just because you have bad credit, that doesn’t mean you can’t do something about it. Low credit scores and high debt often go hand-in-hand, which means paying off your debt can help you to regain points to your score. 

While you may think that if you have bad credit you can’t enroll in a debt management program (DMP), the truth is that a DMP can help you boost your credit and pay down your debt. 

What Is Bad Credit?

According to Bankrate.com, a bad credit score is below 670 for FICO and 661 for VantageScore. While these two credit score companies weigh factors a little bit differently, earning back points to your credit score is done the same way for both. 

Here are the factors taken into consideration for your credit score:

Payment history: Late or missed payments can drive your credit score significantly down.

Credit utilization ratio: Experts advise that you shouldn’t use more than 30% of your available credit.

Credit history: The longer your credit history, the better—so don’t throw way your old credit cards, even if you no longer use them.

Credit mix: Mixing up your credit portfolio is good for your score. This means having an array of loans, like an auto loan, mortgage, credit card, and student loan.

New credit: Opening a new line of credit can boost your score by expanding your available credit. Just don’t max it out or miss any payments.

Boost Your Score With a DMP

A debt management program can help you pay off your debt in three to five years, and in doing so, will help your credit score go up. When you enroll in a debt management program, a credit counselor will work with you on a budget, as well as work with your creditors to consolidate your unsecured debt (credit cards, unsecured loans, collection accounts, etc.)  into one monthly payment while reducing your interest rate. 

By following a budget and your repayment schedule, you’ll quickly see your credit score start to rise and your debt load dwindle—making a debt management plan a good solution to help you become a financially healthier individual. 

 

Debt Management Plan: Enroll Today!

One monthly payment | lower interest rates | no more debt collector calls | improved credit score

Get Started Today!