Consolidation Loan Options for Credit Card Debtors

Posted by Rana & filed under Credit Card Debt Consolidation Information.

Two powerful incentives for credit card debtors to choose loan consolidation are 1) the high interest rate associated with plastic money and 2) Congress’ authorization of a hike in the minimum monthly payment that borrowers must pay. First, depending on consumers’ credit rating and history, interest on many credit cards can range from 20 to 27%. Such high fees apply, for instance, to consumers who have been delinquent in or skipped payments. Secondly, Congress’ recent law bumped the minimum monthly payment that credit card borrowers are required to make from 2% to 4%. This translates into a noticeable increase in card holders’ minimum monthly amount due.

A debt consolidation loan is ideal for credit card debtors with a bad credit history and a significant debt, as it helps them manage and reduce their balance. Debt consolidation loans are, in essence, personal loans that are intended for repayment of a borrower’s other loans and rehabilitation of the latter’s credit score. Consumers may avail themselves of various credit consolidation options. The most popular types of credit card consolidation loan programs can be divided into secured and unsecured loans:

1. Unsecured debt consolidation loans

Collateral, such as real property, is not required to obtain an unsecured debt consolidation loan, which combines credit card balances into one low monthly payment. Unsecured debt consolidation loans typically charge higher interest than their secured counterparts. However, they usually boast lower interest rates than other personal loans, such as credit cards.

One category of unsecured debt consolidation loans and the most common method for consolidating credit card debt is the credit card balance transfer. This loan is optimal for consumers who are not homeowners. A credit card balance transfer enables borrowers to transfer all their credit card balances to one credit card with the lowest rate of interest and a more favorable payment option. Annual percentage rates (APRs) that were previously running from 12 to 24% are lowered to 10, 6 or 0%, thus generating substantial savings for borrowers. Interest rates in the range of two, one and zero percent are readily available in the marketplace, and educated borrowers will find this credit card debt reduction strategy to be extremely appealing. This is because customers will have the opportunity to pay off their credit debt without being subjected to interest fees. Such a consolidation loan allows card holders to combine their bills into a single easy-to-manage, fixed monthly amount.

Numerous credit card companies extend to consumers free balance transfers from their previous credit card. Once borrowers transfer the balance to the new company, they can benefit from a grace period in which they are charged significantly less on the credit card debt. Pursuant to this strategy, individuals must first wait for their old account to expire before opening a new account that provides for a balance transfer. Upon transferring the amount due to the new card, they will be granted a grace period of low or nonexistent finance fees. Borrowers seeking to carry out a balance transfer should first close their old account, since having more than two active credit cards may negatively impact their credit card rating.

2. Secured debt consolidation loans

To qualify and be approved for these credit consolidation loans, consumers must pledge collateral (i.e. car, home). Homeowners may be eligible by utilizing the equity they have accumulated in their home. Secured debt consolidation loans feature low interest rates and flexible terms. Putting up the house as collateral is a worthwhile investment, as long as borrowers avoid using the loans for a purpose other than repayment of their personal debt.

There are several types of secured debt consolidation loans:

Cash-out refinancing is one of the most efficacious and commonly-employed methods for tackling high debt and wiping the slate clean. Individuals with equity in their homes can access those funds and put them to use where needed, instead of continuing to make payments on high interest credit cards. A cash-out refinance debt consolidation loan, which substitutes mortgage debt for revolving and credit card debt offers consumers numerous benefits including the following:

One lump sum of cash A single payment to make at bill time One lower interest loan to repay high-interest credit card debt Less outstanding loans reflected in the credit report The opportunity of financing up to 100% of their home’s value A reduced monthly payment, which frees up funds for daily expenditures A shorter term with a brand new loan A higher credit score A tax deduction for interest paid on the consolidation loan

Credit cards are viewed less favorably than a cash-out refinancing loan for debt consolidation, particularly when balances on the former are 35-50% higher than the maximum balance permitted. Consumers’ credit rating increases when they repay a debt consolidation loan.

The second mortgage debt consolidation loan is another option available to individuals overwhelmed by credit card balances. Second mortgages take the form of either home equity loans or home equity lines of credit (HELOC). A home equity loan enables borrowers to acquire a lump sum, which they repay in accordance with a fixed schedule extending over a set of number of years. To acquire the needed financing, homeowners have the choice of obtaining an equity loan utilizing their equity or even surpassing their home’s appraised value. They may sometimes be allowed to borrow an amount up to 125% of their home equity. A home equity debt consolidation loan is a boon for borrowers with a poor credit history, for it is hassle-free and helps to liberate them from debt. It offers countless advantages for debt consolidation purposes, which include:

Transfer of debt from many credit card companies to a single lender granting a lower interest rate

Flexible repayment terms A lengthy repayment period Repayment of credit balances with one lump sum, as opposed to numerous payments due on different dates Deduction of the home equity loan interest Reduced monthly payment to pay off the debt

Since credit card holders need only make one payment, it is easier for them to keep track of their monthly financial obligations. The only caveat with second mortgage debt consolidation loans is that borrowers run the risk of losing their home in the event that they default on their bills. The other second mortgage debt consolidation loan is the home equity line of credit (HELOC), which functions very much like a credit card. Consumers are granted a line of credit, and they can tap into its funds on the condition that they do not exceed the maximum authorized sum. HELOC interest is also tax-deductible.

To determine whether debt consolidation is more financially-advantageous through a cash-out refinance loan or a second mortgage, credit card holders should compare the current interest rates to those in effect when they took out the first mortgage. If the existing rates of interest are lower, a cash-out refinance is preferable since the rate charged by the new first mortgage can be lower than the current one.

Paying Off Credit Cards

Posted by Rana & filed under Credit Card Debt Consolidation Information.

Credit card debt – most consumers in America try to avoid it, yet somehow find themselves in it! This is heavily due to the fact that plastic money is convenient and it lets you buy something now and pay for it later. However, before you know it, your bills begin to pile up and you end up regretting all the times you uttered the words, “charge it” to finance your purchases. So how can you eliminate credit card debt? There really is no one particular answer to this question, however there are various ways for you to begin to pay off your credit cards and eventually become debt free.

Credit Card Debt Elimination

If you’re one of the many consumers out there who is in debt as a result of credit cards, it’s time to take some action and pay off those credit cards once and for all. You can finally put a stop to the harassing collection calls and endless “final notice” letters from creditors by considering the following ways to eliminate credit card debt:

Limit your credit card usage Pay more than the minimum payment amount each month Consider a home loan Look into other sources where you could borrow from Transfer balances Renegotiate with credit card companies

As difficult as it may be, one of the most helpful ways to eliminate credit card debt is to use your credit cards for emergencies only and, NO a sale at the mall does not qualify! While stopping using them all together would probably work more effectively, it’s virtually impossible and just not practical. However, restricting credit card usage to the necessities such as fuel, grocery shopping etc. is a good way to achieve credit card debt elimination.

Credit card companies are always telling consumers that they’re making it easier for them to make their payments by offering the option of minimum amounts each month. However, the reality is that when you make minimum payments, the majority of it goes towards your interest charges rather than the principal amount, which is actually what you owe. Therefore, if you keep charging your credit cards and paying only the minimum amount due, your debt will keep on accumulating. So if you want to eliminate credit debt, you have to pay more than the minimum amount due each month.

While taking a loan to essentially pay off another “loan” doesn’t sound like the greatest of ideas to eliminate credit card debt, it does makes sense if you can take a low-interest loan and pay off your high-interest rate credit cards. Additionally, interest that is paid on home loans usually counts as a deductible expense, which is another benefit in addition to credit card debt elimination.

If taking a home loan is simply not an option for you because you don’t own a house, then you can consider other sources from which you can borrow the necessary funding. For instance, you may want to look into borrowing the money from your life insurance policy or perhaps your 401(K) plan. If you do use these options to pay off credit cards, you must remember not to use the money on anything else and concentrate solely on eliminating credit card debt.

You can also review your credit cards and figure out which ones have a lower interest rate on them. If you do have these types of cards, you can transfer the outstanding balances from your higher interest rate cards on to them. You can also look for any zero percent interest rate credit cards that you can shift some of your higher balances on. The “zero” percent rate may only be applied for a limited time period, however remember that every little bit helps when it comes to credit card debt elimination.

If all else fails, you can always try to renegotiate with your creditors. You can explain to them that you are unable to pay the outstanding balances and if they really want their money back (which every credit card company obviously does!), they will work out an alternate repayment plan for you to pay off your debt. Consulting with reputable credit management services can also help you to pay off credit cards. They can offer you valuable advice and show you how to better manage your finances to eliminate credit card debt.

Credit Card Debt Management: Paving the Way to Good Credit

Posted by Rana & filed under Credit Card Debt Consolidation Information.

The following situations merit consumers’ immediate attention since they impact credit score:

Balances that surpass the limit or are maxed-out; Balances carrying a high interest rate; Balances that exceed 50% of the credit limit; and Accounts that are past due.

First and foremost, credit card debt management necessitates the implementation by borrowers of the following four criteria, which hold the key to a good credit rating:

1. Payment History

Comprising 35% of the credit score, this is the largest factor in the determination of a consumer’s credit standing. By paying their bills on time, debtors can establish a positive payment history. Steady payments raise the credit score and are the optimal way to achieve credit restoration. Delinquent payments, bankruptcy, and collections adversely impact the payment history of a consumer’s credit rating. The more recent the late payment, the more damage to the credit score. The good news is that, notwithstanding past credit issues, debtors can achieve noticeable results by demonstrating a stable one-year payment history.

2. Debt Level And Ratio Of Card Balance To The Maximum Balance

The second most weighty element (and for borrowers with a short credit history, it becomes a priority) is the consumer’s outstanding debt and credit utilization, which constitute 30% of his or her credit score. Credit utilization is defined as a borrower’s outstanding debt on each credit card in comparison to his or her credit limits. The lower a cardholder’s debt-to-credit ratio, the higher his or her credit score. Consumers can lower their utilization ratio by 1) increasing the maximum balance or 2) reducing their balance. Borrowers with stable payment records may request an augmentation of their maximum balance. Cardholders, particularly those flirting with the limit on one of their cards, can increase their credit rating by lowering their balances. They should ideally maintain their credit card balances at 30% of their limit or less. Another way to boost credit score is to spread the debt between the different cards.

3. Length Of Credit History

The duration of a cardholder’s credit history accounts for 15% of his or her score. The longer the credit history, the greater the proof of financial stability and healthy spending habits in the eyes of creditors. Borrowers should refrain from applying for new cards and closing old accounts since this will take a negative toll on their credit score. Furthermore, it is preferable that they restrict the number of credit cards to two, maintaining low balances on them and quickly repaying the outstanding credit debt.

4. Inquiries

Whenever borrowers complete a credit application, it is added to their credit report. The inquiry carried out by lenders can put a dent in a consumer’s credit score. Individuals who submit one too many credit applications are often interpreted as assuming too much debt or as experiencing some form of financial hardship. Inquiries constitute 10% of consumers’ credit score, while the number of loans and types of credit factor into the remaining percentage of the credit rating.

Consumers may obtain credit card relief by enrolling in a debt management program, which offers the following benefits:

Help with money management and budgeting skills Assistance with financial planning Reduction or elimination of existing debt in only three to five years Waiver or reduction of the interest rate Removal of finance charges A halt to harassing calls from lenders and collection agencies Lower monthly payments Debt management counselors provide credit help to consumers by enabling them to 1) improve their credit score, 2) start on a clean slate, 3) avoid bankruptcy, and 4) save a significant sum in credit card interest.

Credit Card Settlement: Freeing Consumers from the Chains of Debt

Posted by Rana & filed under Credit Card Debt Consolidation Information.

An increasing number of credit cardholders who have racked up a sizeable credit debt and are struggling to meet their financial obligations are obtaining relief through credit settlement. This payment strategy is one of the fastest-growing because it saves consumers money and enables them to become debt-free as inexpensively and quickly as practicable. Even though this debt management option is typically one of last resort, borrowers should contact their creditor to negotiate a credit card settlement, as soon as they find themselves floundering in debt.

In a credit card debt settlement, an agreement is worked out with a credit card company to settle the outstanding debt for less than the full amount owed to it. One might wonder why a lender would accept a smaller amount than what is owed. The majority of individuals to whom a credit settlement is extended are on the brink of bankruptcy. In view of the fact that credit cards are unsecured, bankruptcy precludes any payment to lenders since it discharges a consumer’s debts. Consequently, a credit card company can avoid such a situation by accepting a settlement amount and at least benefit from a percentage of the outstanding debt paid by the debtor.

Credit settlement works as follows:

The borrower contacts the credit card company and explains that he or she is experiencing difficulty with debt repayment. The debtor then informs the lender that he or she will pay a lump sum if the latter agrees to a credit card settlement. Next, the debtor proposes the sum of money that he is willing to pay, informing the credit card company that there are no additional resources at his or her disposal. The credit card company decides to accept or reject the credit card debt settlement. If it agrees to it, the debtor should request a written confirmation of the acceptance.

Although compromise amounts offered by creditors vary, they usually comprise 30 to 50% of the original outstanding debt. When considering credit settlement, lenders examine the following factors:

Payment history Financial hardship that is confronting a cardholder and interfering with his or her ability to pay off the debt The debtor’s lack of assets (i.e., home or car)

Ideal candidates for credit card settlement include those finding themselves in the following straits:

An outstanding credit card debt of at least $10,000 Inability to envision a way out of their indebtedness Incapacity to pay the minimum monthly credit card payments Default on numerous monthly payments Expectation to file for bankruptcy, if all else fails Financial, medical or personal hardships

The main benefits of a credit settlement are as follows:

Lower monthly credit card payments A compromise amount that debtors themselves approved and are able to pay Significant reduction or elimination of interest, fees and finance charges Avoidance of bankruptcy Considerable debt reduction or elimination of credit card debt.

Credit card debt settlement enables borrowers to liberate themselves from the chains of credit card debt in as quickly as 2 to 3 years. In the event that cardholders choose to enlist the help of a consumer credit counseling service (CCCS), they would have to wait 5 to 9 years to reduce or eliminate their debt. Furthermore, a consumer credit counseling service can only lower their interest rate.

Six Good Reasons to Consolidate Credit Cards

Posted by Rana & filed under Credit Card Debt Consolidation Information.

With more than 5 billion credit card offers landing in the mailboxes of U.S. households each year, and a monthly average of six offers per household, it is not surprising that so many Americans are submerged in debt. Hefty finance fees and interest charges that accumulate over time compound the misery of fiscally-overextended consumers trying to cope with minimum monthly payments and ballooning balances. A valuable personal finance tool known as credit card consolidation provides this segment of the population with financial breathing room and prevents them from sinking further into debt. Since this debt relief method may not be the solution for everyone, it is important that consumers weigh the pros and cons to ensure that credit card debt consolidation is monetarily beneficial to them.

Debtors will find credit consolidation to be advantageous in numerous respects. The most attractive features of this debt-reduction method are as follows:

1. One account, One Bill

When credit card payments are split and spread out, the total amount of the debt is not easily ascertainable. A consumer may, for instance, have outstanding balances on six different credit cards and therefore have to issue six separate payments each month. Those who choose to consolidate credit cards will be granted the opportunity to combine their accounts into a single bill and be required to make only one monthly payment. This is a simplified, time-saving and stress-sparing payment method. Furthermore, since there are fewer bills, consumers are less likely to incur late fees.

2. Lower Interest Rates

Credit card consolidation is particularly appealing when it offers the applicant a lower interest rate than the average of his old cards’ rates. If a debtor has cards that feature low rates, he or she can exclude them from credit consolidation. A borrower may lock in a lower interest rate by applying for credit card consolidation, which would combine his or her debts on the existing high APR (annual percentage rate) cards into a low APR card, or even better, transfer the balance to a zero APR card. Such a move is bound to save the borrower a considerable sum of money. Another credit card consolidation option available to consumers is a collateral loan or personal signature, in which high-interest credit card bills are converted into one loan boasting a more favorable interest rate. In view of the fact that current interest rates are at a historic low, it is an ideal time for debtors to obtain a credit card debt consolidation loan. The interest rate on a credit card consolidation loan through a conventional lender may depend on a borrower’s credit rating. To qualify for a lower interest rate, consumers must have a high credit score. One advantage of selecting a low-interest consolidation loan instead of a low-interest credit card is that with the latter, borrowers will be tempted to make purchases and will thus increase their already burdensome credit debt.

3. Lower Monthly Payments

Credit card consolidation enables debtors to reduce their monthly payments and consequently saves them a significant amount of money.

4. Enhanced Credit Standing

Consumers who are consistently late in submitting their credit card payments pay the piper when it comes to their credit rating. By reducing consumers’ debts, credit consolidation offers applicants the chance to improve their credit score. Upon closing their previous credit card accounts and consolidating their debt, borrowers will notice an improvement in their credit score.

5. Reduction In Annual Fees

Another convincing argument for credit card debt consolidation is that multiple credit cards generate substantial annual fees. Although the annual fee on many credit cards stands at $20 or $25, a good number of credit cards carry annual fees as costly as $250. Transferring the outstanding balance on current credit cards to a card charging no annual fee is only profitable if the consumer plans to utilize the card for the year. Borrowers should not pursue credit consolidation if the card’s APR skyrockets immediately following an introductory low or zero annual rate lasting six months.

6. Money Back Offers

Through credit card consolidation, applicants can earn some money upfront. Because of the stiff competition present in the credit card market, some companies offer to give consumers money back when they agree to transfer the balances on their credit cards to them. For instance, a borrower might undertake a credit card debt consolidation with a credit card offering 5% debt forgiveness.

Improve Your Credit Rating – Effective Ways to Repair your Credit History

Posted by Rana & filed under General Debt & Loan Consolidation Information.

Tarnished or damaged credit is a financially and emotionally-taxing event in the lives of consumers, and it mars their payment history. Constituting 35% of the credit rating, payment history is the leading factor in the calculation of a borrower’s credit score. Therefore, it becomes imperative for debtors with a blemished credit history to find a way to boost their credit score. By pursuing one of the numerous available avenues for credit history repair, they can start rebuilding their credit and cleaning up their credit report.

To reconstruct a positive credit history, card holders should consider the following effective strategies for credit repair:

1. Cease using their credit cards

Consumers should tear up or boycott their credit cards until their debt is brought under control. They should also refrain from submitting additional applications for credit.

2. Dispute derogatory information in their credit report

Debtors should obtain a copy of their credit report, which documents their payment history, from the three main credit bureaus. If, upon reviewing their credit history, personal information, and amounts and dates of the enumerated debts, they find inaccuracies, outdated items or mistakes, they should dispute them immediately. One negative item can have a significant impact on their credit score. By reporting the error to the consumer reporting agency and/or the reporting credit agency and requesting that they correct the information, consumers can raise their credit score.

3. Get current on their delinquent accounts

Late payments negatively impact card holders’ credit scores. By paying off their existing debts and making timely payments, they will substantially improve their credit rating. To prove their renewed capacity to pay on time and establish a positive credit history, consumers may apply for secured credit. They should ensure that the lender reports to the three credit bureaus, so that prospective creditors will take note of their payment history. To speed up the repayment process, borrowers may wish to consider 1) selling their belongings, 2) consolidating their debts and/or 3) asking a friend or relative to co-sign on a credit card or small loan.

4. Negotiate a repayment plan with creditors

Another method of credit rating repair involves negotiating a payment agreement with creditors. By maintaining an open account and fulfilling their payment obligations, debtors will demonstrate that they are able to make regular payments. As a result, they will acquire a positive credit rating.

5. Solicit credit repair help

Legitimate organizations, such as the Consumer Credit Counseling Service, can assist borrowers, at little or no cost, in creating a repayment plan and improving their credit.

6. Enlist the help of a credit repair service

When it comes to credit repair, some consumers choose to go the solo route. Others, however, prefer to hire a credit repair service since they lack the patience, time, and or/expertise to do what is necessary to effectuate a credit history repair. Credit repair services can help consumers raise their credit scores dramatically and establish a positive credit history. Typically, it will perform the following tasks on behalf of card holders:

Dispute misleading, false, and negative marks on credit reports Provide debt management counseling Set up personal repayment plans, such as debt management plans (DMPs), that fit their clients’ budget and allows them to improve their credit report by paying down their debt through monthly payments.

What Credit History Repair Means for You

Posted by Rana & filed under General Debt & Loan Consolidation Information.

Credit cards can be either a blessing or a curse, depending on whether or not they are utilized judiciously. Although plastic money has facilitated our lives, the reality remains that in the past two decades, more and more Americans have slipped into the black hole of credit card debt. Paying down debt can be quite stressful, let alone difficult. Yet, those struggling to pay off their credit cards each month need not despair, for there is a host of credit card reduction strategies available to them.

Here are a few suggestions to eliminate credit card debt:1. Pay more than the minimum: If paying off the entire balance is not possible, then consider making a payment that exceeds the minimum amount due.2. Call the credit card company and ask for a lower interest rate. 3. Transfer balance to a low-interest rate card: Consumers can transfer their balance to a credit card with a more attractive interest rate (ex: one with an introductory rate between 5.9 percent and 6.9 percent), thus making it easier to pay off the principal.4. Obtain credit card debt relief through the Debt Reduction Pyramid: This credit card debt management method consists of knocking off the lowest-balance bills first. Once the card with the lowest balance is paid, concentrate on the second card on the pyramid and then move on to rest of the cards until they are all paid off.5. Size up bills by interest rates: An alternative form of credit card debt settlement involves listing the credit cards with the highest interest rates and then attacking those in descending order, namely the balance with the highest annual percentage rate first. Once that one is paid off, focus on the debt with the next highest interest rate.6. Cash out the investments and savings and use the proceeds toward credit card debt settlement.7. Obtain a loan from family and friends.8. Take out a home equity loan and use the loan proceeds for credit card debt management.9. Borrow from a 401k qualified retirement plan: As compared to other credit card reduction strategies, this option allows debtors to borrow $50,000 or up to 50% of the 401k account’s value, whichever is smaller.10. Contact a consumer credit counseling service: Amongst the credit card debt reductions strategies that certified consumer credit advisors deploy on behalf of debtors are:

Assessing the financial situation. Creating a spending plan debt consolidation into one convenient monthly deposit. Negotiating terms such as lower interest rate, waived late fees, and a lower repayment schedule with the creditors.

11. Self-help measures: The following simple credit card debt reduction strategies can help consumers save $50 per month:

Packing your own lunch Using coupons for groceries and purchasing store brands. Shopping at discount and consignment stores. Cutting down on outings (i.e. restaurants, movies)Offering handmade cards and gifts. Tracking spending on a regular basis to determine which ‘luxuries’ can be avoided

Any one or a combination of these credit card debt reduction strategies will put the consumer on the right track, under the condition that he or she sticks with the pay-down plan.

With current charge card debt in the U.S. surpassing the $360 billion figure, it is logical and imperative that consumers take all the measures possible to eliminate credit card debt. The credit card debt reduction strategies outlined above will keep bill-swamped consumers from sinking further into debt.

Increasing Your Credit Score: How To Improve Your Credit Rating

Posted by Rana & filed under General Debt & Loan Consolidation Information.

Millions of Americans in the United States have a less than perfect credit rating, which is why there are so many consumers out there who are searching for ways to raise their credit score. Why is credit score repair so important? A consumer’s credit rating weighs heavily on his/her ability to obtain new loans, mortgages, credit cards and more in the future.

Your credit score is usually a number between 300 and 850 and if you have a low rating, you pose a higher risk for defaulting on a loan to potential lenders. Additionally, a poor credit score often means paying higher interest rates. On the other hand, a higher credit score lets lenders know that you aren’t likely to default on your loan payments. Essentially, the credit rating on your report is the determining factor when it comes to lenders, landlords, insurance companies and others’ decision of whether or not to conduct business with you.

What Do Lenders Look For?

In terms of computing your credit score for loan purposes, lenders tend to focus on five sections of your credit report. They include:

Past payment history Current outstanding credit debt How long you have had credit Types of credit you have qualified for and received Any new credit you have applied for

If you are lacking in any one or more of these areas, you can improve your report by increasing your credit rating.

The Road to Credit Score Repair

The road to raising your credit score begins with your credit report and the good news is that you can usually access your report online at no cost. Once you obtain your credit report, you will need go through it in it’s entirely and search for any inaccuracies that may exist. If you do come across any information that is incorrect, you should contact your creditors immediately by writing a letter that explains the inconsistencies found on your report. It would also help your cause to attach any supporting documentation which can justify the claims made in your letter.

So what happens next? Well, once the credit reporting agency receives your letter, they have one month to investigate your claim. As for coming to a resolution, the reporting agency can come to one of two decisions. First, they can decide that your claims are completely genuine and change the misinformation on your credit report as well as send you an updated version. Second, they can conclude that the claims you made are false and therefore leave your credit report exactly the same.

Aside from removing misinformation on your credit report, you can also begin to pay off the higher balances you owe in order to raise your credit score. If you have a high balance, it only serves to significantly lower your credit rating. Why? Because it greatly affects your debt ratio; the amount you owe compared to the amount of your total available credit. In addition, if you have more than one account with a high balance, you can pay off one every month and work your way down in an effort to increase your credit score.

Another way to win the race of increasing your credit score is to stop being late on your payments. If you have any bills that are past-due, it’s best to pay them off right away and keep them as current as possible. There really is no excuse to get behind on your payments. If you have certain bills that you know you will have difficulty in paying on time, you can contact that particular creditor in advance and attempt to negotiate a payment plan. This way, you can avoid any negative information from being displayed on your credit report.

The most effective and obvious way to raise your credit score is to eliminate debt all together, which is definitely not an easy thing to do. However, if you stay on top of your finances and open up new accounts sparingly, you should eventually be able to increase your credit rating.

Consumer Credit Counseling Services

Posted by Rana & filed under General Debt & Loan Consolidation Information.

Are you someone who is constantly awaiting your next paycheck? Are you hounded by phone calls from debt collectors on a daily basis? Are you having difficulty creating a budget that actually allows you to pay your bills in a timely manner every month? If this describes your current financial situation, perhaps it’s time for you take some action. Consumer credit counseling services can help solve the financial problems that are plaguing you.

Help, I’m in Debt!

Generally, consumer credit counseling companies tend to work with unsecured debt. Most of the time, consumers seek credit counseling services as a result of credit card debt; such types of financial problems can usually stem from the following:

Unsecured bank loans Defaulted car loans Student loans Utility service bills Unpaid rent

Most credit counseling organizations offer services to help consumers’ manage their credit debt. Many people have benefited by finally becoming debt free from seeking the assistance of qualified consumer credit counseling services and you can too! The key is finding reputable credit counseling organizations, as they will be able to provide you with good credit counseling and helpful debt management advice.

Types of Credit Counseling: What to Look for

Credit counseling is typically offered by non-profit organizations; examples include CCCS (Consumer Credit Counseling Service) and MMI (Money Management International). The services provided by non-profit credit counseling organizations are free, which means you do not get charged a monthly service fee. However, there are some credit counseling companies that are for-profit and therefore charge a certain fee for their services.

Maintaining caution is extremely important when you are trying to find consumer credit counseling services. Why? Well, if you aren’t careful, you can wind up being scammed by disreputable credit counseling organizations that claim they can help you get out of debt, but really end up pushing you further into debt. Credit counseling services that are considered to be “shady” also have a tendency to use questionable practices in an effort to repair your credit.

On the other hand, trustworthy credit counseling companies have a lot to offer consumers. Not only can you get help creating a personal budget for yourself, but they will also offer you advice on how to most effectively manage your money and debt. Reputable consumer credit counseling services also offer you educational materials and workshops, which help to keep you motivated and on track financially. In some cases, you may actually be required to take some instructive classes on budgeting and debt management techniques, which is truly valuable on the road to debt relief.

Additionally, it’s helpful to know some of the important features that go along with reliable consumer credit counseling services. These consist of companies that employee qualified personnel to help you analyze your individual financial situation and come up with a customized plan to resolve your money problems. So what exactly constitutes as “qualified personnel?” The answer is credit counseling companies that have counselors who are highly trained in the areas of consumer credit; budgeting, money and debt management.

Being in debt doesn’t have to consume your entire life; if you’re facing financial difficulty due to debt problems that are beyond your control, it’s time to get some help. Consumer credit counseling services can ease your financial burden by offering you sound advice and useful debt management tips. The greatest benefit of using credit counseling services is the money managing tools and techniques you retain. They can help you to better control your budget and avoid any financial pitfalls in the future.

Debt Consolidation: What You Need to Know

Posted by Rana & filed under General Debt & Loan Consolidation Information.

First, what is debt consolidation really? In short, debt or loan consolidation is simple: you take out one loan to pay off many others. Why would you do this? Many times you can secure a fixed interest rate, a lower interest rate or simply for convenience. One of the most common examples of consolidated debt involves several credit cards, student loans and financed items (jewelry, furniture, etc.) all rolled into one loan with one monthly payment at a lower interest rate.

Debt consolidation can be as simple as moving several unsecured loans into one unsecured loan, but more often than not, it involves moving several unsecured loans into one secured loan, taken against an asset such as a house. This allows a lower interest rate for the consumer because they agree to foreclosure to pay back the loan if they are not able to make the monthly payments, which reduces risk for the lender.

For many people, debt consolidation is the easiest, least expensive and fastest way to get out of large debt. And sometimes, loan consolidation companies will discount the amount of the loan. This typically happens if the debtor is in danger of filing for bankruptcy and chooses to consolidate their debt. The debt consolidator can then buy the loan at a discount and some consolidators will pass part of the discount along.

Debt consolidation programs are recommended most for individuals who are paying off credit card debt, as most credit cards carry the highest interest rates. For those debtors with a home or car, those items can be used as collateral, resulting in a lower interest rate and less total money paid to pay off the debt.

The key points of debt consolidation programs for paying off credit card debt include:

Lower interest rates which equal lower payments. These types of loans and debt management programs will both lower your interest rates, as well as home equity loans or personal loans. The latter two sometimes offer lower rates than a credit card and can be used to pay off other bills. Some debt consolidation programs will also negotiate lower interest rates with creditors. These reduced rates will ultimately lower your monthly payment, however, it is important to continue paying as much as you can to lower debt quickly.

Temporary lower credit rating. As with any credit activity, taking out personal loans or enrolling in a debt management program will temporarily lower your credit score. This can be offset by closing other accounts, which is also recommended to manage future debt.

Open credit is tempting. By paying off accounts or transferring the balances, the open credit might be very tempting, however it is important not to use those accounts and focus on paying off the current debt. You can either close those accounts altogether, or remove the cards from your wallet and put them in a safe place.

Easy management. Paying one bill is much easier than paying 10. Instead of having multiple accounts to manage each month and bills to stay on top of, you have only one, with only one monthly payment.

Debt consolidation is a worthwhile solution to getting out of debt for many people. However, for consumers interested in using debt consolidation as a means to get out of debt, it is important to take steps to prevent winding up in the same situation a few years later. With loan consolidation should come debt management training. Look for a program that will help you learn to better manage your finances.