Settling for lesser than the amount owed on a credit card might leave a smudge on your credit report. However, a smudge is much better than the big old smear that would appear if you defaulted completely and the credit company wrote your debt off. So, if you are over your head in debt and need some help, yet don't want to ruin your credit, then consider credit card settlement.

What is a Debt Consolidation Loan?

A debt consolidation loan is like any other loan except for the fact that it is designed to help you pay off debt and consolidate it into one payment and one lender. This has many benefits for the individual in debt and it is really a great way to get on top of that debt that has been causing you so many headaches.

Where to Apply?

The majority of financial institutions offer debt consolidation loans. This includes banks, credit unions, finance companies, and other types of lenders. Once you have applied at one of these places for a debt consolidation loan you will receive either an approval of the loan or a denial. The better your credit the better chances you will receive the debt consolidation loan.

What if I have Bad Credit?

If you have bad credit you can still apply for a debt consolidation loan. However, you will want to do so with a finance company or bank that works specifically with individuals who have bad credit. You will find many times the terms to be higher and stricter than if you had good credit, but there are options for individuals with bad credit who are interested.

What Next?

After you receive your debt consolidation loan you will need to pay off all of your debt. This is basically transferring a bunch of small to medium sized debts to one larger combined one. However, the benefit is that you will only be required to make one monthly pay and it will be less than the combined payments for the other debts you were making before.

What NOT to do

Once you have received your debt consolidation loan and begun paying it back you might feel like you have your debt under control again. This might make you feel like using one of those credit cards that has a balance of zero. However, this is the biggest mistake you can make. When you get a consolidation loan you need to focus on paying it off and not engaging in the same activity that got you into debt in the first place. So, cut up those credit cards, store them in a safety deposit box, or just hide them from yourself. You don't want to close your accounts because that will hurt your credit, but you absolutely do not want to use your credit again unless there is a MAJOR emergency that cannot be taken care of in any other way.

If you follow these tips and suggestions you will find yourself debt free before too long and better able to control your spending. This is important for financial freedom and it simply takes dedication and personal control. You can do it if you really want to, so just make getting out of debt and staying that way a priority!