Sometimes it is necessary to get some help in clearing up your debt, and adopting a debt management plan can be an excellent vehicle to move you towards a debt free existence. In short, a debt management plan works for people in severe debt who are eligible to enroll in a plan that allows you to systematically pay down your outstanding debts.
Once enrolled, you will make your monthly payment to your credit counseling agency, and they will then distribute these funds upwards to your creditors. For many consumers however, they worry about worsening their credit rating by participating in a Debt Management Plan (DMP).
Will a DMP Affect My Credit?
If your question is, “Will a DMP affect my credit”, you should first realize that ongoing credit collection efforts already having a negative effect on your credit. Most Debt Management Plans are scheduled to last three to four years. While in the program, your credit report will note any obligation that is being paid down under the program. While it is impossible to completely assess how a DMP will impact your credit score, the following is information to keep in mind:
- 35% of your score is based on payment history
- 30% of your score is based on amounts owed
- 15% of your score is based on length of credit history
- 10% of your score is based on new credit inquiries
- 10% of your score is based on unique individual factors
Discover a Debt Management Plan to Heal Your Credit
If you wondering whether enrolling in a DMP will affect your credit score, you need to know that continuing your current financial path is already destined to destroy your credit rating. Contact our team of caring financial experts here at Americor Financial for the retirement advice that you and your family can trust.