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Got Mail? Here’s How Consumers Are Improving Credit With The Help Of COVID Debt Consolidation

Covid Debt Consolidation

Whether you know it or not, your credit factors into various areas of your life. More than just a three-digit number used to get a home or car loan; credit reports paint a picture of a person’s financial habits. Lenders, creditors, service providers, and even employers review financial records to determine how risky it would be to work with a particular individual. What they find makes a difference in how much you can borrow, what you’ll pay in interest, and if you’re trustworthy. 

What Your Credit Says About You

If your credit history says a lot about you as a consumer, borrower, or employee, what is yours saying right now? If you’re like most people during these uncertain times, it doesn’t say anything nice. Since the pandemic started, many people saw their scores decline as the negative ratings increased. 

Missed Payments

For consumers who were unable to pay all the bills, they opted to overlook “less important” expenses. Financial obligations like student loans, credit cards, and credit lines were put on the back burner as things like mortgage, rent, groceries, and utilities took precedence. 

What It Says: Too many missed payments on a credit report look bad. It says that you’re unable to keep up with financial obligations.

High Utilization Rates 

When people were running low on money, they turned to credit cards for relief. They could charge things like gas, groceries, and smaller bills to the account and pay the balance down over time. Although they had good intentions, some people weren’t able to reduce the balances. Late fees were applied, and the interest continued to accrue, causing the amount due to skyrocket. 

What It Says: High utilization rates say that you don’t know how to balance your debt. If given an opportunity, you will use everything you have and repay it whenever it suits you. 

Debt To Income Ratio

The debt to income ratio is the amount of debt you have in comparison to your income. Keeping this under thirty percent is recommended to show lenders, creditors, and service providers that you’re responsible. If you have several credit card accounts with high balances, then your debt to income ratio rises. 

What it Says: A high debt to income ratio says that you’re in over your head with debt. It gives the impression that you can’t handle another credit account or loan. It shows that you may be a risk for service providers when it comes to repaying debts (since you don’t have enough to cover your bills as it is).

Collection Accounts

If you have a bunch of high-balance accounts, you’re frequently missing payments, and you don’t have the money to pay promptly, it won’t be long before they’re turned over to collections. 

What it Says: Collection accounts say to creditors, lenders, and service providers that if they do take a chance on you, there’s a high possibility that they won’t get their money back. If they can recuperate anything, it’s going to require them to spend more money on collection efforts or sell your account at a loss. 

COVID Debt Consolidation

So, where does a financial agency like COVID Debt Consolidation come into play? They offer consumers overwhelmed with unsecured credit card debt an opportunity to consolidate. They receive a loan that covers credit card balances, leaving only one debt to repay. As long as borrowers are responsible, it has great advantages for their credit. 

  • They get rid of negative credit card accounts and avoid going to collections. 
  • One monthly payment makes it easier to pay in a timely fashion improving payment history. 
  • As the debt consolidation loan is paid down, it reduces your debt to income ratio and credit utilization percentages. 

The national pandemic resulted in a lot of people falling behind financially and ruining their credit. As credit histories and scores are essential to various facets of life, it caused a spiral of financial hardships. By opting to work with companies like COVID Debt Consolidation, consumers can turn things around, get back on track, and show creditors, lenders, service providers, and employers that they’re responsible adults.

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