Does Seeking a Tax Relief Service Hurt Your Credit?
Here’s the honest truth: If you are considering whether or not you need a tax relief service, chances are you either a) Already have bad credit or b) Might be in enough tax debt where your credit score will eventually be affected in the near future. So the real question here is “How can I avoid hurting my credit?” The answer is not so simple.
There are many things that determine a credit score. This is calculated by the FICO score. According to myFICIO, the FICO score calculates your credit by the following:
- Payment history – 35%
- Amount of money owed – 30%
- How long of a credit history you have – 15%
- How much new credit you have – 10%
- Other credit accounts (credit cards and loans) – 10%
The Bigger Part of the FICO Score: Payments
As you can see, making payments is a big part of your credit score. That means if you default or are late on any payments, it can negatively impact your credit score. So even if you don’t have multiple lines of open credit and you haven’t had it for long period of time, as long as you are faithful on your agreed upon payments—which is usually on a monthly basis, your credit score can still be satisfactory.
This is why if you find yourself in debt, you want to take the precautionary steps to ensure that whatever you owe is being paid, or your credit score will be only one of your concerns!
Making sure that your credit score is high is just as important as making the payments. In order to keep a good credit score, you must take on the responsibility of making your monthly payments before the deadline. Don’t be late, and most importantly, do not miss a payment.
Another Solution: Debt Consolidation
While taking the responsibility of clearing your debt by yourself is smart, hiring the assistance of a tax relief firm is smarter! Taxpayers who find themselves in a significant amount of debt will usually consider debt consolidation. While this may clear some of the smaller debts, it doesn’t directly affect your credit score, because the amount you owe remains the same, if not more because of the interest rate.
Managing Your Credit Score
Hiring a tax relief firm to manage your debt might reflect on your credit report. It will show that payments are being made by an agency, and according to Credit.com, this will not affect the FICO score, but some lenders may take this into consideration when reviewing your application for a loan. However, not hiring a tax relief firm may result in mismanagement of funds and delinquent accounts that ultimately result in…bad credit.
The benefit of hiring a tax relief service is having confidence in knowing that your debt is being properly managed. This way, you won’t have to worry about defaulting or being late on a payment.
Success Tax Relief: Helping You Maintain Good Credit
As payments make up a great deal of your credit score, other aspects of the FICO score must be maintained. Otherwise, the remaining percentage will plummet. Having a good credit score is about balance, and the team at Success Tax Relief can help you achieve that. To learn more about what you can do to avoid, keep, or get a good credit score, call Success Tax Relief today at 877-825-1179.