Proverbs 22:7 states, "The rich rule over the poor, and the borrower becomes the lender's slave." Debt is a form of bondage, and today's Christians can turn to the Bible for alternatives to quick fixes. While credit repair companies and debt consolidation companies offer claims that they can quickly repair credit or overcome debt in a matter of months, they are usually scams which should be avoided. Overcoming debt can be accomplished with desire and discipline.
What does the Bible say about Debt?
The Bible does not state that debt is sinful but instead it warns Christians to avoid being in a state of surety. Surety exists when a person is deeply in debt without a means of repayment. The Books of Proverbs and Psalms instruct about the consequences of excessive borrowing and the lack of financial planning (Psalms 37:21 and Proverbs 21:5.) Overcoming debt can be spiritually freeing, and families that follow the Bible's guiding principles will foster good financial habits in their children.
Debt Consolidation Pitfalls
While some debt consolidation companies may be reputable, many may inadvertently cause damage to already weakened credit scores. Stories of companies taking payments and not sending them to creditors have been reported. Late payments to creditors on clients' behalf have also been reported. Some companies offer debt consolidation loans with high interest rates, meaning the consumer makes lower monthly payments but pays more over time. Also when an account is in debt consolidation, the credit report reflects this through a notation on the account. Future creditors may view this as a negative situation. If an agency closes the credit card accounts at the start of the debt consolidation program then the overall available credit decreases, but the balance stays the same. This will cause a credit score to drop.
Getting out of Debt
Crown Financial Ministries offers five basic strategies for overcoming debt. The first step is to transfer ownership to God through prayer. This includes money, time, possessions and family. Next is to give the Lord what he is due through the act of tithing. The third step is to incur no more future debt. Pay everything in cash and stop the use of credit cards. Developing a budget that is realistic to your situation is the next step. Lastly, retire the debts by paying down higher interest debt first and then moving on to the next debt until all debt has been paid.
Credit Repair
Time is the greatest healer for a bad credit history. Therefore paying bills on time is essential to rebuilding credit. Be suspicious of anyone who claims that they can quickly remove erroneous information from your credit report. You are entitled to one free copy of your credit report each year. Review the report for inaccuracies. Highlight any errors and report them to the credit agency. If no response is received within 30 days, the error should be removed from the report. You also can add a statement of up to 100 words to your credit report explaining any financial situations that may have affected the report adversely.
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