If you have credit card debt, you’re not alone. Surveys show that 50% of cardholders carry a balance month to month, and about two in five cardholders have maxed out a credit card or come close since March 2022. With the holiday season in full swing, consider your debt before adding more items to your cart. If you’re struggling financially, a debt management program (DMP) can help.
When you enroll in a debt management plan through a certified credit counseling agency, you’ll meet with a counselor. They will then work with your creditors to reduce your interest rate and consolidate your credit cards into one affordable monthly payment. While debt settlement companies may charge you up to 15%–20% of what you owe, DMPs typically cost around $40 a month.
If you’re worried about how a debt management program will impact your credit, here’s what you can expect:
-
Your credit score may temporarily go down
Credit card companies will usually close your accounts when you sign up for a debt management program. This will cause your credit utilization ratio (the amount of available credit you’re using) to go up, affecting 30% of your score. But don’t worry, this is only temporary. As you pay down your cards, your credit utilization will go down and your score will go up.
-
You’ll improve your credit history
Making consistent payments through a DMP will improve your credit history, positively impacting 35% of your credit score.
Paying down your credit cards will pay off in the long run
Although your credit score will indicate to lenders that your accounts are in counseling, it doesn’t impact your credit score. Ultimately, through a DMP, you’ll pay off your loans and boost your credit score with on-time monthly payments.
Enroll now to prevent holiday shopping debt
A survey from WalletHub reported that about 50% of Americans are still in debt from the last holiday season. By enrolling in a debt management plan now, you can start paying down your debt and start off the year on the right track.
Let's Get Started
Make a FREE online appointment to discuss your options