Lauren is Searching For Ways to Get Out Of Debt And Make Her Bad Credit Go Away

“Dear Steve,

If I find a consolidation company to help me pay my bills will my bad credit go away?


Dear Lauren,

It is usual for people to search for a magic wand that will make their debt go away without impacting their credit report. There really is no such solution, and here’s why.

In order to help keep your credit report and credit score looking good you need to pay your debts as agreed. That means that you need to pay your debts in full or make at least the minimum payment that you contractually agreed to. Any repayment plan outside of that has consequences.

Typically by the time people come to realize they are in financial trouble they are either very maxed out or they’ve been late or missed a payment or two. Those events tend to be the cold water thrown in the face of the person in denial.

By the time those events happen, your credit report and credit score have already taken a hit. So many people go to credit counseling and latter say they were not behind before they went into a debt management program and the reality is, they were but did not remember it.

Eliminating debt and improving your credit score are two different goals. It is a bit like saying that you’d like to set a new land speed record and go scuba diving at the same time. Good goals but not necessarily requiring the same focus or tools.

To get out of debt and avoid bankruptcy you need to come up with a plan that you can sustain over the long course of paying down your debt. Typically this means that you’ll have to make monthly payments but they will be smaller than what the creditor wants. If you could afford the full payment you would not be looking for help, would you? These reduced payments will appear on your credit report and lower your credit score.

If your goal was to repair your credit and make your credit score and credit report look good, it is actually fairly easy to do but you have to at least pay your bills on time, without delay, without reduction and without exception.

When facing difficult debt it would be smarter and wiser to focus on a two stage process. First, seek out the best solution to address your debt. That might be debt management, debt settlement, bankruptcy, a second job, better budgeting, etc. And then once the debt is under control we can rebuild the credit latter.

Let’s plug the hole in the dam first and then we’ll repair it.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

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