Ask the Readers $200 Giveaway: Would You Ding Your Credit to Get Out of Debt?

By Ashley Jacobs on 5 November 2013 (Updated 12 November 2013) 193 comments

Congratulations to Mary Happymommy, Petal Flowers, and Adrienne gordon for winning this week's contest!

Many people are on a quest to have a good credit score while also trying to get out of debt. However, when it comes to debt settlement, consumers can take a hit to their credit score in order to pay off their debts at a substantial discount. This begs the question, which is more important: being debt free or having a good credit score?

Would you ding your credit to get out of debt? Why or why not? Is your credit score or being debt free more important to you? Why?

This week, National Debt Relief, one of the country’s largest and most reputable debt settlement companies, is sponsoring $200 in prizes for our Ask the Readers giveaway! Make sure to tell us if you would ding your credit to get out of debt and we'll enter you in a drawing to win a $150 or one of two $50 Amazon Gift Cards!

Win a $150 Amazon Gift Card or 1 of 2 $25 Amazon Gift Cards

We're doing three giveaways — here's how you can win!

Mandatory Comment Entry for a Chance to win a $150 Amazon Gift Card:

  • Post your answer in the comments below. One commenter will win a $150 Amazon Gift Card!

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This week, our Ask the Readers giveaway is sponsored by National Debt Relief!

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National Debt Relief is a BBB accredited business that helps consumers resolve their debt problems without filing bankruptcy or debt consolidation loans. They are the #1 rated debt consolidation company on TopTenReviews - a leading independent consumer review site.

NDR wants to know if it makes sense to temporarily ding your credit to resolve a financial crisis and get out of debt in 2-4 years compared to struggling to make the minimum payments for years and paying $1000s in interest charges.

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Mary Happymommy

I don't think I would ding my credit. I've had relatives who have done that and I didn't think they made a wise choice.

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Betty

Thankfully, I'm not in this position. If i were, i would probably ding my credit to become debt free. Eventually your credit can be repaired. If I were that much in debt, I wouldn't want to use credit for a long time anyway.

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Jennifer Marie

I would not ding my credit to get out of debt.

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Kali

I think being debt-free is far more important that having a glowing credit score. You'll have time after you pay off debt to improve your score, and having a low score is unlikely to cost you real dollars. Holding debt, however, WILL cost you actual money in interest. Not to mention the stress and anxiety that often comes with being in debt! It's worth it to take a hit on your score now to be debt-free ASAP.

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jason hatfield

I think it makes sense to temporarily ding your credit to resolve a financial crisis and get out of debt in 2-4 years..

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Michelle Murphy

If my only choice to be debt free was to ding my credit - I would definitely do it! Your credit score can be rebuilt and in the meantime you are out from under the burden of being in debt. The key, then, would be to have learned a lesson and not get back IN debt. If you don't learn that lesson, then it is useless. By the way, being debt free is AWESOME! Thanks, Dave Ramsey!

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Jessica

I would ding my credit. I would rather be out of debt first.

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martin

I can use that $150 to help with my snowball debt project.

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Liz

I would not take a Ding on my credit to get out of debt. Although, right now I have no debt and my next big purchase is a home. So. right now the most important thing for that process is my income and credit.

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Peg Mooers

Absolutely! I only use cash. you can't spend what you don't have!

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Elena

I would ding my credit card because I think being debt-free is more important

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James S.

Here's a few things I learned working as a credit specialist:
1. there's no "ding" - it doesn't make any noise at all [=
2. don't kid yourself: if your credit is going to be "ruined" by having it checked, then you didn't have "good" credit in the first place.
3. If it will get you out of debt to do it then, yes, absolutely you should have you credit pulled for the use of whoever is planning to get you out of debt and for yourself to see whats going on there.

Use it as an opportunity to learn more about what spending habits will yield a higher credit score for you and how you can get on that path. Learn as much as you can about how your credit is evaluated and how you can make it work for you. If money is power then positive credit is the access to that power.

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Karen L. @love2lovemykids

I would only ding my credit to get out of debt if I was certain that I would not need to take out any future loans before I could rebuild my credit score. I would focus on credit card debt, not installment loan debt.

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Calah hansen

I would totally ding my credit to get out of our underwater townhouse. However it's a joint decision and the hubs is very serious about taking care of our own mistakes and financial problems so we are currently saving money and biding our time. Another option we are considering is renting our townhouse out and renting another home to alleviate some of the space issues as our family grows.

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Andrea

Absolutely I would ding my credit to get out of debt. Once you're out of debt, you can start working on ways to improve your credit store. The debt is an absolute emergency and should be treated as such.

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Catherine

I would 100% take a hit on my credit to get out of debt. However if was trying to buy a house i would have to take a deeper look to see how much it would effect my credit and thereby my ability to get a good rate.

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Charles

I think it would depend on my immediate future plans. If I were looking to buy a house in the immediate future, and I had a very good reason to believe that a similar opportunity wouldn't present itself later, I might prefer to keep my credit report pristine. But I think my gut reaction is very strongly to just get and stay out of debt and then be able to save money.

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Rachel Patrick

I would ding my credit to get out of debt for being debt-free is most important to me. When we are in debts, its very hard to move on life, because we are being saddled with unnecessary burdens that come with debts, the thought of owing someone or a creditor money, and the consequences of not being able to pay up is scary and stressful. This is in turn will affect every aspect of my life individually and sometimes perhaps even those around me, like my family. And inevitably, this will decrease my quality of like as being in debt can also cause stress and more stress causes worry, tension and sickness, all of which I do not desire to have. A debt-free life is the most liberating experience one can ever have.

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KJ

Good question - not sure if I would ding my credit to get out of debt. I think I would rather have a good credit score and change other parts of my life to pay down the debt than ding my credit score.

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Sally

It depends on how much debt I'm in/what the impact to my credit score would be. I would say being debt-free is more important to me than my credit score.

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Selene Montgomery

No, I would not ding my credit score to get out of debt. We currently are in the excellent range and can finance just about whatever we want. Getting ready to get a larger RV, so credit score is important to us.

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Cheryl

We filed bankruptcy in order to stop the creditors from calling. I don't recommend it for everyone, but it was the best choice for us (and I would do it again knowing what I know; however, we won't do that again!!). We are now back on track 2 years later, but we were at the bottom and had to claw our way up!!

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Diana Foster

If I were deep in debt, I would risk lowering my credit score to resolve my debt issue, because if you are unable to keep up with monthly payments, it is only a matter of time before your credit score is going to hit rock bottom anyway.

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Gina

Absolutely. Being debt free is more important to me. I'll never be able to afford a house so I don't need the credit score for a mortgage. I never plan on moving so I won't need the score for a new apartment. I live in an area with good public transportation so I don't need the credit score for a car. I'd have amazing peace of mind being debt free and could always work to build my credit score back up. Plus, being debt free would allow me to focus on creating an emergency fund and saving for retirement instead of being solely focused on digging my way out of debt. I could look toward the future instead of paying my way out of the past.

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Jessica Fleek

Absolutely! It is worth it in the long run to ding your credit now to get out of debt. Your credit score will thank you in the future!

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Amanda

I would not ding my credit to get out of debt.

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Heidi

Yes! I would absolutely ding my credit to get out of debt.

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Diane B

I probably would...being debt free would bring so much relief. There is so much pressure every month to make the monthly payments..just not enough money to go around!

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KJ

We had to make this choice recently to sell our house. We decided to keep our credit standing in good shape and took the hit on the house. We knew we could build back our savings/IRAs but could not do all the other things we needed to do if we trashed our credit.

So, no I / we would not ding the credit to get out of debt.

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CINDY C

if I was in young and in debt, I would take a ding and start over to improve my credit score

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Natalie

I would totally ding my credit. Once you're out of debt you could (theoretically) start having the cash on hand to make up for the ding in credit.

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Maria S

Being debt free is super important to me & I would take a hit to my credit score to be debt free!! It's so tough, though, because so many things depend on you having good credit. I'd still go the debt free route, better sleep at night.

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Sally

My credit score is more important than getting out of debt. Debt can be paid off over time whereas a credit score can affect you immediately in terms of employment (some companies check credit scores!), buying a house, etc.

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Alicia

No, I would not add any additional "ding" to my debt, it's just more debt!

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Dana

I would certainly consider taking a hit to my credit score in order to pay off a presumably substantial ($25k+) amount of debt. If I didn't plan to buy a house or make any similar major purchases within the next few years, then I think it's worth the tradeoff. If I were older, I don't think it would make sense to ding my credit in order to get out of debt.

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Ernest S.

I would normally say yes, but I recently learned how important your credit score can be. Whether it's getting a car loan or even applying to lease an apartment. I think maintaining your credit score might be worth the extra effort and debt (unless the debt is overwhelmingly large!).

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Trang

Yes---debt and the interest that pile up are crippling over the long run, and you can rebuild your credit score over time.

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Tamara C.

I would sacrifice the score to get out of debt. I've done it before and it was worth it. I worked with a debt management company to start tackling my debt. It wasn't easy because part of the terms required closing all of my accounts, which lowered my score. However, at the time, it needed to be done so I could finally make some progress on my debt and get my spending under control. Now, the debt is gone and my score has increased significantly.

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R. Williams

Being debt free is more important to me as it gives me a peace of mind and will help me to look forward to my family's future. I have small kids and ensuring they don't have the burden of my debt and that their future is secure financially is very important to me.

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Margaret Smith

I would try everything I could not to ding my credit. My brother had to ding his credit many years ago and he had to pay such higher interest rates on his mortgage. I'd really try not to be in this position as much as possible.

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Caitlin

For me, it would depend on how much I was in debt. At my current rate of debt, I am making aggressive payments while drastically cutting my budget in order to pay it off quickly. If my debt was much higher, I would probably take the ding to pay it off more quickly - and save a bit on those hellish interest rates. You can start improving your credit right away, after all. It takes time, but it will improve again.

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Dana

I have worked in the finance industry and have found that it doesnt really hurt people as much as you would think, so yes I would ding my credit if it meant getting out of debt.

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Susan D.

I'd be more inclined to ding my credit than stay in debt. That's a choice I made, reluctantly, fifteen years ago. My credit has since recovered. (Phew!)

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Amanda Sakovitz

I dont think I would do it from everything I've read about doing it, its not really a good decision for me.

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Cliff wrangler

Glowing credit scores are not as valuable if you're broke. Plus, those credit scores will be affected with increasing debt. Take the hit now for a better future.

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Marsi

No, I just couldn't do it. I had to claim bankruptcy years ago and have struggled to regain my credit rating. I try to live by the cash only policy but have had to use a credit card for gas and groceries a few times.

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KENNETH

I would definitely ding my credit to pay off my debts. This would be an easy decision for me, as credit scores would be repaired over time. Also, once debt-free, I do not plan to take out any loans or create new debt, therefore, my high credit rating would not be as significant.

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Elizabeth V

My credit score is what got me into trouble in the first place! I closed some accounts while I was getting out of debt, and I didn't care: I just wanted to be free!

I haven't applied for new credit in years, and with the exception of a mortgage, I don't intend to ever again. We're currently saving for a 20% down payment, and intend to request manual underwriting when we apply for home loans.

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Annette

I wouldn't ding my credit. My credit score is important and I'd prefer to learn to live within my means to get out of debt. Unless one learns how to get out of debt, they'll likely keep taking on more debt.

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Candice

ABSOLUTELY! My husband and I did this, and we have not looked back. We got in over our heads (yes, it was our own stupidity!). When we realized we would never be able to make any progress, we proceeded with debt settlement. It was incredibly difficult, and our credit scores took a major hit (not a ding). We have lived on a cash only basis for over five years, and it is amazing. We have purchased a car, gone a vacation, and paid for our daughter's braces - all without owing anyone anything. Our new motto is "if we can't pay for it, we don't need it!" I really figured living with a low credit score would be difficult, but it hasn't been. We have a nice "emergency fund", and we have been able to start college funds for all three kids. Plus, now that we are not paying off debt, we have been able to max out our contributions to our retirement funds each year. If you can live debt free, I highly recommend it!

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Catherine

I would unless I had a house purchase on the way. To me, credit score doesn't matter that much.

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Denise L

I would ding my credit to get out of debt. Being debt free is more important than a good credit score to me.

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Q

No question. My credit is pretty great to start with, it heals itself over time, it's not like I'm gonna be looking for more loans in the near future!

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Lori P

Do the job on your own and you can possibly preserve your credit score. I wouldn't damage my credit unless I had no other way.

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Jessie C.

I wouldn't ding my credit to get out of debt since I have seen some bad examples in my life.

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Christopher Hannum

I would. I am a student planning on going through medical school so I'm looking at half a million dollar of debt in education before I see my first real paycheck.

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Amy Sydavong

Hello! I think I would take a hit to my credit score in order to pay off my debt. I'm currently working hard on that now and I know that I can always help my score get higher and rather worry about that than owing anyone money! Thanks wise bread!

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Katie

I would take the credit ding only as a last resort. My first choice would be to get fanatical about paying off the debt by only paying for absolute essentials, downsizing/selling stuff, and increasing my income by taking a second job in the evenings and on weekends. You know, the old fashioned way.

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Katie

I would take the credit ding only as a last resort. My first choice would be to get fanatical about paying off the debt by only paying for absolute essentials, downsizing/selling stuff, and increasing my income by taking a second job in the evenings and on weekends. You know, the old fashioned way.

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Amanda

I would ding my credit to be debt free, certainly.

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Christina Z

I would rather be debt free

Guest's picture

No I wouldn't ding my credit b/c I've worked to hard to build up this credit.

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Abigail

We're already have a mortgage, and we have some savings. So, yeah, I think I'd ding our credit if it meant getting out of debt. It would obviously be the last resort, but we're trying to save up for major expenses, like double-paned windows or my husband's full mouth dental implants (*not* cheap). So I think we could get away with a ding or two.

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Guest

I have had to do this. I was a single woman trying to dig out of my prior marriage debt. I wasn't planning to purchase anything so it didn't matter if it dinged my credit or not

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Connie

Considering that nowadays your credit score is used for everything from housing to employment, I will never intentionally damage my credit by any measurable amount. Ever.

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chris

Nothing is guaranteed so I would not take that hit/risk

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Melissa Hansson

I wouldn't sacrifice my credit to get rid of debt. Credit is too important to all aspects of life nowadays - job applications, your home, your car, not just finances.

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Stephanie

I am in the take a chance with a 'ding' group. Credit can be improved with some common sense tactics, and being debt free adds to your overall resource toolbox IMHO.

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Jenn C.

I would, but not to the extent of declaring bankruptcy, but just about anything less! And this is only because we've lived under the hindrance of debt since graduating college, I just want to be free and if I choose to undertake debt again, to do so as a cognizant adult now that put some real strategy behind it.

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Ally

Yes! Just to have it gone at this point.

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michelle

I wouldn't ding my credit to get out of debt.

Donna Freedman's picture

If I were deeply in debt I'd consider that a bigger issue than my credit score. So yes, I'd take the hit and then work diligently to stay out of the hole in the future -- and take steps to rebuild the credit.

Guest's picture

If you were going to pay off all of my debt to take a decent sized ding on my credit, I'd do it. Pay off both mortgages and my student loans for me and I wouldn't need to borrow money again for years, so what would it matter? That's better than any sign up bonus credit card.

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Laure

Yes, I'd do it, as long as it wouldn't be doing anything I view as unethical, like shirking the debt. Being debt-free would be wonderful.

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Monique

I would ding my credit to get out of debt. For me, the freedom of being out of debt far outweighs the consequences of a low credit score for a few years. Of course, I'll qualify that by saying that I don't have any plans to apply for any kind of loan that would require a decent credit score. And I know that after a while, I could work my credit score back up, all with the benefit of not having debt stressing me out and weighing on me.

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Ann Fantom

No, I wouldn't do that

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klr

I would avoid it at all costs, but if my credit was getting dinged anyway because I couldn't make payments, I would look to take the immediate hit to get out and start rebuilding sooner.

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BRB

Yes, if I knew I could completely get out of debt and would not need the credit score to buy anything significant in the near future.

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Jay

Would be better to be debt free and not paying interest on debt.

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kim kihega

I am in debt right now, so I would say yes I would ding my credit!

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Sara

I wouldn't ding my credit to get out of debt. I've found that debt has not affected my high credit score in any way, so in my mind, debt is the preferable situation.

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Jen

That depends...if I was about to make a large purchase I needed financing to obtain, such as a home, education, or vehicle, then no, I wouldn't. Otherwise, I would! Although I suppose it would depend upon the size of the ding. If someone gave me $50k to pay off my student loans to shave 50 points off my FICO score, I would, but if it was going to cost me 300 points I wouldn't.

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Lynda

i don't think i would. i'd rather spend longer getting out of debt.

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Hilary

If needed to.

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Guest

I don't think I would ding my credit cards. though one never does know what one would do if pushed by extreme measures.

Guest's picture

It depends (such a typical answer in personal finance!). I would take a look at my seven year picture.

If there was a reasonable chance that I could use more debt in the future to sustainably make my life better I would be hesitant to ding my credit. If; however, I felt like my debt was overwhelming and I could not see any improvements in my life income wise over the next seven years I would take the credit hit in a heart beat to wipe out my debt. Bankruptcy and debt restructuring are amazing tools that can help protect you in the long term. Just make sure you use them when it ACTUALLY makes sense and when you REALLY need it, not when you just wish you had more money to spend.

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Diane

I did it... filed bankruptcy to get out of debt. And it was the best decision I ever made, given the circumstances. It was a huge ding to my credit, but after 10 years I'd made a complete recovery, I have no debt other than a mortgage and I have a FICO score of 800.

It took years to recover, but it was the right thing to do at the time. I live in a Community Property state (Louisiana) and my ex-husband left me with $750K in debt from his failed business, as well as an IRS lien on our house, 2 young sons and a part-time job. There was no other way out. I could never have repaid that amount of money.

So my answer is it depends on your circumstances. If you can pay off the debt in a reasonable time, that's one thing. If you can't, that's another. I was being harassed by my ex-husband's creditors, followed by private investigators looking for him, though he was long gone. Sometimes, you do what you have to do. I have no regrets!

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Cynthia chupp

Debt lingers over my head and sucks up all my money. My credit score will recover. I would take a hit on my credit score to get out of debt.

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Cecee

Currently the husband and I are in a very small amount of debt (~$10,000 in student loans, no car note, no credit cards, etc.) and we have successfully been able to pay off all of our past debts quickly and efficiently. If, however, we would get in a situation where we had a substantial ($100,000+) amount of personal debt (medical bills or something of the like) we would absolutely ding our credit to pay it off. I don't see this happening though, because we have made a pledge to live a debt free life, and if possible when we buy a home we will pay cash for it.

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Bethany

I would ding, but not a huge dent worth.

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Alissa A

I'm torn and hope I don't have to choose! BUT I probably wouldn't ding my credit.

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Laura J

I think I would ding my credit to be debt free, all that interest adds up and takes forever to pay off. It adds up so fast. I would rather pay cash if I could.

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Deb

I would take a ding to my credit score to get out of debt. It doesn't matter how good your credit score is if you have a lot of debt that you're dealing with, because you don't have money to buy what you need. But having debt paid off would give me freedom to use my own money to buy what I need and not need that credit that would look at my credit score. And I could rebuild my credit score over time slowly. Being debt free is a big goal of mine right now.

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Lvgirl

I had to make that same decision 2years ago. I owed $250k on my house that was worth $80k. Bank wouldn't refinance, then I lost my job. Consulted with many financial advisors and attorneys. I decided to file for bankruptcy. Yes I lost my house, but I no longer have the fear and stress and health problems related to the burden of my debt. Now I am rebuilding my credit. I was able to get a credit card and get a loan. Both helped me to re-establish my credit. It was a challenging situation and I will probably never want to buy real estate again. But for me I made a informed decision to ding my credit to get out of debt, so I knew what the consequences would be. My decision has helped me to move on with my life.

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Keri B.

I would ding my credit score in order to pay off debt. My reasoning is because your credit score will eventually rise again, and that's a certainty, but your debt can keep building and building and who knows how long it might take you to get out of debt.

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Cynthia C

I would not do it and hope I would never be in that position.

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Christina

Maybe I would ding my credit to get out of debt. The credit can be rebuilt in the next few years, in those years I would be working on whatever I did to get into the mess that caused this, so would be unlikely to need credit, I would need to not be buying new things and working on saving money and paying off this debt and rebuilding my credit to create new good habits so this wouldn't happen again.

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Christie

I don't think so, but it would depend on how big a ding my credit would take. If it were 20 points, that I could make up quickly, but if we're talking 200, that would not be a wise choice for the future.

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Guests idea

I think it's ok to ping your credit. I am doing that now. In four years we will be out of debt. I think if you don't get into the habit of running up your debt and learn to control when your on the spending program is perfectly fine. Why not get everything paid in a short time rather than paying interest month after month makes no sense. But the point is to learn control.

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Jillian

Yes, definitely. Having the dept means your credit is probabaly already poor, and not having to continue to pay it off gives you the opportunity to work to improve it for the long haul.