Debt negotiation and debt management/consolidation both help consumers pay off their debts through two different approaches. Each affects your credit score, payoff period, and taxes differently. Before choosing either options, be sure you understand the long term consequences of each debt management option.
Influence On Credit Score
Debt consolidation is better of the two when it comes to influencing your credit score. By consolidating your different loans into one, you are using the same amount of credit and will be dinged only slightly for opening another account.
If you choose a debt consolidation company, your creditors may report delayed payment. However, after regular payments have been established for several months, you will be able to apply for more credit if needed.
Debt negotiation leaves a lasting impact on your credit history, much like a bankruptcy. When creditors agree to reduce your debt, a record of the debt reduction will stay on your credit score for seven years. However, you will be able to qualify for credit as your score improves, usually within two years.
Payoff Period
Using a home equity or personal loan to...
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