You may have heard of debt consolidation before. It is a financial strategy for people trying to retake control of their credit card debt. Here are truths behind the myths surrounding debt consolidation that prevent most Singapore clients.
#1 It is a scam.
It is a legitimate method to pay off debts. Look into the company first to determine if it is a reputable company. Avoid any firm that offers a lump sum to pay off your debt through settlement.
#2 Consolidation and management plans are the same.
Although they are similar, there are a few differences. A debt consolidation plan usually involves taking out a loan to pay off your debts, leaving you with single monthly payments.
#3 Debt settlement is the cheapest alternative.
It does sound like the best deal you can find on the surface. However, debt settlement firms usually charge considerable fees. It can be 20%-25% of the final settlement.
#4 Debt consolidation will cause you less.
Any debt consolidation plan can help you save money. Your credit score influences the interest rate. If you pay high-interest rates on credit card debt, debt management solutions may be a better alternative.
#5 It leads to even more debt.
DMPs and debt consolidation necessitate credit counselling with a debt consultant. It intends to reverse the pattern. Increasing your financial knowledge is essential for being debt-free. Make use of tools and resources online to assist in creating critical financial habits, such as the establishment of an emergency fund.
#6 It will only hurt your credit score.
Payment history and credit usage are the two most essential aspects of a credit score. Your credit score will improve as you make on-time payments and lessen the amount you owe. Your credit score will improve when you are debt-free.
Are you looking into debt consolidation firms in Singapore to get a loan? You can come to Debt Aid. Talk to a debt consultant from their firm and learn how to be free of your financial burden to improve your credit score.
