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Isak1

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Debt management Help!!!
Hi,
I am current 23 year old college graduate, just recently got a decent job(past 6 months) with 30k credit card debt on 15 credit cards. While I was in college I was using the credit card as source of living, rather then taking student loan, that was my mistake I realized. I had problem paying off the balances so it just carried over. I only have one payment reported 30 days past due and that's all, it just high utilization kills my credit score over 98%. Just one credit has 15k balance the others 5k, 2k, 1k.... I am having trouble bring down the balances....and it kills me even though my job pays decent amount(50k a year) plus the interest also. I was considering gettting a loan, but didn't work well.... now considering debt management program that closes my credit card and pay it off. Any recommendations please on how this might effect my credit score in long run, in terms of getting a mortgage or lease a car. Thank you !!!!

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You have some tough choices.  Every card that you close will hurt your score right now.  You will end up paying a debt management company to do this. Yes, they can and do have a little more power than you to negotiate lower interest and possibly even back interest to get these paid sooner.  However, along with the closing of the credit card, if the companies right off any balances then that will be on your credit report for 7 years also. As others have said, the companies can do somethings and advise things that will help with that Credit card debt, but it will be a killer to your scores for the short run.

If you are truly in a position that you cannot take out a loan, maybe with a cosigner, and cannot afford to get these paid down yourself. Then it might be a good course of action, as the interest on CC is killer and if you have had late payments that interest can go even higher, read the fine print on your agreements with the CC.  Only as a last recourse, yes use them.

I would exhaust all possibilities of a consolidation loan first, using a cosigner, do you have any collateral such as a paid for car, trying a couple banks, before using a debt company.  Yes, it might mean a couple of inquiries on your report, but at this point that is minor in my opinion. Or even take a hard look at how you might accomplish paying them off yourself, the tactics of paying lower interest or lower amount cards first is always a fun exercise.

I have also heard some good things about Dave Ramsey even though I have not looked into him myself.

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Utilizations has no memories, therefore it won't have any long term effect on your credit. But of course the late payment will have impact for 7 years... As far as I know which is very little about debt management, however, it tend to make your credit far worse before it gets better, they "may" tell you to stop paying all together, so they can negotiate better terms with your creditors, it might work, but that also means you would have bunch late payments on your report first and possibly charge-offs, your creditor might elect to sue you rather than negotiating with you or your representatives, simply because you have a well paying job. 

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Personally, I would tighting up my belt and get it pay down as quickly as I can. If your other credit cards have room? Do a balance transfer, so your utilizations aren't 98% as it goes by both individually and aggravated percentage. Once you bring it down to manageable level? Apply couple of credit card that have zero % introductory offer to help you pay it down bit quicker.

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Additionally, you may want to check Dave Ramsey's site for information on effective payment arrangements because he does have some good ideas that work.

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