Jun
19
Equity loans, credit counseling, debt consolidation, bankruptcy, and debt management plans are some of the options available to consumers today that are overwhelmed by outstanding debt. Although these programs all attempt to help consumers manage their debts effectively, many people do not dispose of their debts through these programs. So why do 50% of consumers fail to eliminate their debt using one of these programs? All of these programs have one fault in common that causes them to fail for the majority of people.
You may be thinking that it is the interest rates, the quality of the companies, or the fees that cause people to fail to eliminate their debts when using these programs. It is none of these, however. The main issue with most debt management programs is that they require you to pay a fixed amount every month with no exceptions.
So why are fixed monthly payments a problem? The average consumer does not have the exact same income every month. Seasonal workers only work for part of the year and therefore make more during those times than they do during the off season. Commissioned salespersons depend entirely on sales for their income – the more they sell the more they make and vice versa. Part time workers often have variable hours and thus a variable income. Other workers may have overtime hours periodically.
Now take a moment to think about your expenses. With the exception of your rent or mortgage and your car payments, do you spend the same amount of money every month? Probably not. Monthly bills such as your phone bill and utility bill can vary from month to month. Other expenses such as medical bills and car repairs can arise unexpectedly, possibly leaving you short on money by times.
A variable income and fluctuating expenses may not be a problem if you have money left over at the end of each month and additional money in your budget to allow for unforeseen circumstances. Most consumers, however, are having difficulty paying their bills and are living from one paycheck to the next. In such a situation unforeseen expenses may severely damage one’s budget.
Most people have good intentions upon entering a debt relief program. For example, let’s take a look at credit counseling. You need help managing your credit card debts so you enter a credit counseling program. Your counselor negotiates a monthly payment of $500 which sounds good to you. At first everything is going smoothly – you are able to make that $500 payment every month for the first several months. Then the water heater breaks and it will cost $800 to fix it. So, unless you enjoy cold showers, you will have to miss your $500 payment to the credit counseling agency this month and will only have enough money for a portion of next month’s payment. This may leave you in a worse financial position than before, since you absolutely cannot miss any payments when you are in a debt relief program.
Most debt relief programs are inflexible. The majority of them do not make allowances for emergencies such as car repairs, medical emergencies, or any other unforeseen circumstances. You cannot call the court trustee, your loan officer, or the credit counseling agency and tell them that you will not be able to make your payment this month. If you could, then these programs might have a higher success rate.
There is one program available that offers the flexibility needed for today’s consumers. It is called debt negotiation, or debt settlement. It is ideal for people who are having trouble making their monthly payments and are faced with overwhelming debts. In some instances it may be better alternative than bankruptcy, which can negatively impact your credit rating for at least seven years and make it nearly impossible to obtain financing during that time.
Why is debt settlement such a flexible option? The answer to this question is quite simple: you control the money. A separate savings account is set up for you and you put money in it until there is enough to make a practical offer to one or more of your creditors. This is the most flexible of the debt management options available to consumers, but it does have some disadvantages. The monthly payment is deposited into an account that is set up and controlled by you purposely to repay your debts. If you have a tough month financially it means that you have less money to negotiate with. If you are able to make up the difference later, that is great and you will have more money to settle with. If not, that is how life goes sometimes. Once you have enough to negotiate one account (generally between 35% and 50% of the total balance owed), it is time to make an offer. If your creditor accepts the offer, you can start to save money to approach the next creditor, and so on.
Keep in mind that debt settlement will not eliminate all of your debt problems. However, if you have to miss a payment because of an emergency the program does not end. If other debt management programs were as flexible then there may be a higher success rate and perhaps fewer people would feel the need to declare bankruptcy.
The articel has been brough to you by Daniel Buros. You can find more information about at Debt Solution or Debt Relief.
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Feb
27
Many people who are overwhelmed with credit issues want to just throw up their hands and let someone else take care of it for them, that’s where credit repair specialists come in. There are a lot of companies that will help you sort out all your credit issues, but before you go out and hire one, here are some things you need to take into consideration.
For one thing, before you pony up any money you should just take matters into your own hands and do it yourself. At least get your own credit reports and check for errors. If you want help after that point you can always hire someone. Make sure you get a report from all three credit bureaus: Experian, Equifas, and Trans Union. Don’t assume that they will all have the same information or that if one report is accurate they will all be accurate. Information can vary greatly from one company to another so check all three, carefully, for any mistakes.
If you are convinced that hiring outside help is the only way to go, keep this information in mind:
1. You should steer clear of any company that ‘promises’ you that they can remove negative items from your credit report if they are accurate. No matter how painful it might be you have to face the fact that accurate information stays, sometimes up to ten years. If a company claims they can remove accurate information keep looking, they are lying to you.
2. Make sure that you have a written contract in place that explains all the things the company will do for you as well as how much it will cost you. Some companies charge a one time up front fee, other’s will set up a monthly payment plan. Just make sure you read over the contract and that everything is spelled out. You have three days to cancel a contract, in most states – check with yours, after the day it’s signed.
3. Be sure that before you waste time and money you are committed to the plan to get your credit back on track. In almost all cases, it will take determination and even a little sacrifice to improve your credit score. If you’re not 100% committed to taking all the steps necessary you’ll just be throwing good money after bad. It’s gut check time, if you’re not ready, don’t pay for someone to help.
4. Don’t let a company try to tell you that they can set up a second credit file. That is fraud and even if they were able to do it (which in most cases they can’t) you could get in serious trouble.
When it comes to getting back on stable financial ground, you really can do it yourself with a little time and effort, but if the process just seems too overwhelming and you want to hire credit repair specialists, just keep the tips above in mind so you don’t jump from the frying pan into the fire.
Having trouble sleeping because of credit problems? You only need to invest in one credit repair solution, so why not use the best? CHECK IT OUT
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Feb
23
By Ozeme J Bonnette
There will be times that information reported by the three credit bureaus is incorrect. But it is also possible that the bad records on our credit reports are completely accurate. Since negative information may stay on our reports for seven to 10 years, the ideal way to deal with these accounts is to clean them up.
Contact the creditor
We should try talking with our creditors to see if they would be willing to work out a payment plan. It is better to try to work these out before they end up going to court. A judgment on a credit report is much worse than a late account or a collection account.
Even if the account has been sent to a collection agency, we should still try to start with the creditor. Sometimes, they may be willing to negotiate. Other times, their contracts with the collection agencies won’t allow them to discuss the account further.
Aim for a win-win situation
Regardless of whom we end up negotiating with, we must make sure that we have a win-win offer. We must work out a payment amount that makes both parties happy. We should ask the collector to give us a more favorable note on our credit report in exchange for making the payment. There are two timeframes to look at.
First, we want to ask to have the account reopened during the payment process. This is not so that we are able to use the account. This is only to help the account reflect better on our credit report. If the account is extremely delinquent, this may not happen. However, it never hurts to ask.
Second, once the payments have been completed and the account is paid in full, we would like the report to reflect that. We should ask that the report show “paid in full”, not “settled” or “paid collection.”
Get it in writing
These negotiations should all take place prior to making the first payment. We should ask that the creditor or collector put the agreement in writing before making any payment as well.
There have been numerous times that creditors or collectors have reneged on verbal agreements. Sometimes, the representative making the arrangement is not authorized to make changes to the account. Other times, the representative may not properly note the account so that other representatives looking up the account information will know what has been going on.
Stick to the plan
Once negotiations are complete and the agreement is in writing, it is absolutely imperative that we stick to the agreement. One mistake can void the whole thing and put us right back where we started.
We should only agree to what we know we are able to handle. If a problem does arise that might cause us to miss a planned payment, we absolutely must call the creditor in advance to forewarn them of the situation. If we are honest and upfront, it may be easier to keep the agreement intact.
After payments are completed, give the creditor time to correct things with the bureaus. It may take a month or so to see the changes, but stay on top of it.
The most important thing moving forward is staying disciplined. Once old accounts are cleaned up, we cannot start the cycle over with our current accounts. Being careful from the beginning makes credit management so much easier.
Ozeme J. Bonnette is a financial coach, speaker, and author of Get What Belongs to You: A Christian Guide to Managing Your Finances. Her focus is on increasing financial literacy among adults and youth around the U.S. She earned 3 Bachelor’s degrees at Fresno State, and her MBA at UCLA’s Anderson School. Her blog is http://www.povertynorriches.com. Reach her at ozeme@thechristianmoneycoach.com.
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http://EzineArticles.com/?Ways-To-Work-On-Bad-Credit&id=5962582
Jan
21
Unfortunately, anyone who finds themselves behind the eight ball can be a potential victim of a scam or just plain unethical treatment. Having a poor credit score is no different. There are a lot of bottom feeders out there that love the opportunity to line their pockets at the expense of desperate people. That’s why it’s so important for you to be careful who you turn to to help you clear up your credit issues. National credit repair has a reputation for providing personalized one on one counseling to all their clients to help them get their credit back on track as quickly as possible.
When it comes to relying on a paid professional to help you with your credit, it is definitely a case of buyer beware. Do your homework so you don’t get hooked up with the bottom feeders I mentioned above.
Here are some things to keep in mind:
1. Don’t let anyone tell you that they can remove accurate, but negative, items from your credit report. They can’t. If the information is incorrect it can be removed, but if it’s accurate it will stay on your report for up to 10 years (bankruptcies). Even if you’ve paid off a bill the late payments will stay on your report.
2. A credit repair company, by law, must provide you with a written contract explaining all your legal rights. You also have 3 days to cancel the contract after it’s signed if you have second thoughts. If you are dealing with a non-profit group, or the creditor directly, the same rules don’t apply
3. Don’t respond to an email unless you’re the one who initiated the contact. Many disreputable companies will try to catch desperate consumers off guard. Make sure that you do detailed research on any company before you hire them to help with your credit issues. You don’t want to get yourself in more trouble by spending a lot of money on ‘credit help’, money that you might have just used to pay down some bills.
4. Don’t forget, a lot of credit repair can be done by you. It’s not that hard. Just request a copy of your credit reports and your FICO score from all three credit bureaus. Check them over carefully for any mistakes and make a written request that those mistakes be corrected. The credit bureau must comply within 30 days. Be prepared to provide proof that what you say is true and that a particular item really is a mistake. This one step can raise your score significantly in as little as a month.
Even if there are no mistakes, if you can explain why you fell behind on your payments that may make a difference. You can request that an explanation be added to your credit report. For example, if you had a good history until you got sick and got overwhelmed with medical bills you can request that that information be added to your report. It may help mitigate some of the negatives on your report in the eyes of a potential lender.
If you choose to hire a credit repair company keep the tips above in mind so you don’t get involved with an unscrupulous company who will just make things worse. National credit repair has a solid reputation of helping their clients finally get back on solid footing financially, maybe they can help you too.
Having trouble sleeping because of credit problems? You only need to invest in one credit repair solution, so why not use the best? CHECK IT OUT
Source: http://www.submityourarticle.com
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Jan
7
It’s easy to dismiss someone with bad credit as ‘irresponsible’ or a ‘deadbeat’ but the reality is that bad credit can, and does, happen to good people. All it takes is one long term illness, an unexpected repair bill, or lost time at work and you may well find yourself in the same situation. Finding good methods of credit history repair can also be fairly easy, you just have to know what to do, and what not to do.
Many people will tell you to cut up your credit cards and if you find that you just don’t have the discipline to have available balances on your cards and not use it, this may be a good option for you. Ultimately you want your financial situation to be under control and that’s as important, or even more important, as worrying about your credit score.
You see, one factor in your credit score is the ratio of available credit to your credit limit. That means that if you have one credit card that has a $1,500 limit and you only have a $200 balance on that card you still have $1,300 available credit. That will reflect positively in your overall credit score. On the other hand if you had that same $1,500 limit on your card and you owe $1,500 you are maxed out and that does not reflect positively on your score.
If you close an account it can actually hurt your score since you will not have the same ratio of available credit. Still, that is a small price to pay if you simply aren’t able to resist the temptation to use the card.
Another thing you have to get in the habit of doing is to check your credit reports at least yearly. Make sure you get one from each of the three major credit bureaus: Experian, Equifax, and Trans Union. Don’t assume that the information will be the same on each one, it won’t be. If you discover a mistake contact that bureau immediately in writing with any documentation you need to back up your claim that a mistake has been made. The credit bureau has to make the corrections to your credit report within 30 days which can result in an almost immediate boost in your credit score.
Since it can often take much more than 30 days to get a desirable credit score you should start now. Don’t wait until a few months before you want to apply for that new car loan or a new mortgage. If you go into your local bank with a strong credit score you will not only have a much easier time of being approved, you will also qualify for much, much better interest rates which can save you big bucks over the course of the loan. It will also make your monthly payments smaller and easier to handle.
If you choose to hire someone to help you with your credit history repair just make sure that you are careful who you choose. Take time to read the fine print and find out what, if any, the charges will be to you for the help. Sometimes a loan consolidation may be a good option, sometimes not, ask questions so you can make the best decision for you.
Having trouble sleeping because of credit problems? You only need to invest in one credit repair solution, so why not use the best? CHECK IT OUT
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Dec
23
Most people don’t realize it but there are actually several credit repair secret tips that you can use to help undo the damage that’s been done to your credit score. None of this information is widely advertised, I mean, why would it be? An uninformed consumer is a sitting duck to all the threats and harassment of a debt collector. Don’t ever forget though, that you do have rights and that debt collectors have strict rules they have to follow.
The first thing you want to do is make sure that whatever negative things are on your credit report are accurate. It’s important to check your credit reports, from all three credit bureaus, at least once a year. If you find a mistake, contact the credit bureau immediately in writing and request that it gets corrected. This simple tip can help you raise your score and get rid of inaccurate information that has been costing you money in higher interest rates.
When you contact a credit bureau keep a detailed file as to the date you sent the letter, sending it certified may be a good idea, as well as a copy of the letter you sent them. Unfortunately sometimes the credit bureau isn’t right on top of everything and it’s a good idea that you keep track of everything in case they try to jerk you around.
When you are requesting that something gets changed or corrected you don’t have to be timid. Don’t treat them like you are a servant requesting a favor. Of course you want to be polite and professional but you aren’t asking them for a favor you are asking them to correct a mistake. Don’t let them push you around.
Don’t expect this process to happen quickly. By law the credit bureau has up to 45 days to get back to you (but I’ve personally seen it take much longer). This is a process and you have to let the process work it’s way out no matter how long it takes and how aggravating it can be.
If you want to work on your credit because you are contemplating buying a new home or car and you want to get approved, don’t wait until the last minute. Start right now on repairing your credit. Remember, this is a process and it will take time.
In the meantime, while you are waiting for the process to work, make sure that you make all your payments on time. That includes all your household bills such as utility bills and not just your loan payments. You may not realize it but utility and cable companies report to the credit bureaus too and late payments can affect your credit.
You can rebuild your credit without resorting to underhanded tactics if you’re willing to devote the time and consistency it will take and that may well be the biggest credit repair secret of all. Don’t forget, the sooner you get started the sooner you’ll qualify for a great rate on that new car loan or mortgage, and that will be great!
Having trouble sleeping because of credit problems? You only need to invest in one credit repair solution, so why not use the best? CHECK IT OUT
Source: http://www.submityourarticle.com
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Dec
19
Hire a Credit Repair Professional
Credit repair services play an important role. Unless you are a resolute do-it-yourself type, it probably makes sense to hire someone to do the things you do not have the time to do on your own. Think about it and you will discover that you already rely on others, those with specialized expertise, for almost everything. Are you surprised?
Who Do You Need?
Before discussing the importance of credit repair services, let us take a minute to think about the range of businesses that provide services you do not perform for yourself. Auto mechanics, carpenters, plumbers, dry cleaners, computer technicians, attorneys, doctors of all types, and even the postman, provide services that you are unlikely to do on your own.
We All Depend on Others
Credit repair services are a commercial endeavor. Some people might fix their own car, and it is probable that most people cook their own dinner from time to time. But that does not isolate you from dependency on the expertise of others. After all, you may be able to change your oil, but you did not manufacture the car. And you may be able to make dinner, but you did not grow, ship, or market the ingredients. There is a long chain of professionals that contributed at each step.
Your Credit is Critical
There is nothing that can impact your financial life like your credit report. The importance of good credit, and hence the potential importance of credit repair services, is staggering. Your credit can determine your employment options, rental opportunities, and of course the availability and terms of any financing you apply for. If your car is in need of serious repair do you really want to fix it yourself and risk getting stuck on the side of the road?
Do Not Get Stranded
Credit repair services are comparable to auto mechanics. If you only have a single, simple issue on your credit report, go ahead and do it yourself; it should be no harder than changing your oil. But if your credit issues are more complex you will almost certainly be better off hiring a professional. Given the importance of your credit you should not risk getting stranded on the side of the financial road.
What is Involved?
Proper credit repair involves an intimate working knowledge of all of the laws that govern credit reporting and the national credit bureaus. It also requires knowledge of other related state and federal laws such as the Fair Debt Collection Practices Act and state specific statutes of limitation. To start credit repair without adequate information is certain to cause problems.
Looking for the Right Company
If you have credit issues you owe it to yourself to consult a professional. Here are a few guidelines for finding and hiring reputable credit repair services. Start with the Better Business Bureau. Check the rating as well as the type of complaints the company has. An occasional complaint is not necessarily a problem, but if you see a pattern it is likely to be an indicator of the experience you will have. And then pick up the phone.
Trust Your Instincts
Prepare a list of all of the questions you want to ask about your own situation, pick up the phone, make the call, and ask away. It is important to have a good feeling about any company you hire to work on your credit. If you are not comfortable, move on, regardless of anything else. If this happens, find another company that passes the Better Business Bureau test and give them a call. Trust your instincts and go with the company that feels right.
Copyright © 2010 Ian Webber. All Content. All Rights Reserved.
Ian Webber is an expert in consumer law and consults for several of the leading credit repair services . Ian is a graduate of the London School of Economics and The University of Chicago where he earned his LLM. Ian is currently based in California.
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Nov
5
If you feel as though your credit score is some sort of mysterious secret, then you are not alone. While there is no verifiable statistic as to how many people feel this way, the fact that the credit reporting agencies don’t readily reveal their calculation methods makes easy to see why people are in the dark about it. You may not need to know the exact formula, but it’s still smart to have an understanding of how they come up with your credit score so you can whatever possible to maintain or improve your score.
After all, if you don’t know what goes into your credit score, there is no real way to do anything about it. Having a better idea of what elements go into determining it and how it’s calculated allows you to have more control over your financial health. With that in mind, here is a breakdown of what the credit score is made of.
- The most important part of your credit score is based on your history of making payments. Believe it or not, this counts for a staggering 35% of your overall credit score. Now, if you have a spotless record of making payments on time, then this is actually good news. However, if you occasionally forget to pay a bill and are routinely a few days late, then this could be bad news. I say ‘could be’ because different creditors have different policies on when they will report a late payment to the credit agencies. However, you don’t know what that threshold is, so it’s best to pay all of your bills and loans on time.
- Your blend of credit adds up to 10% of your score. Having a mortgage, car loan, credit card and perhaps a store account that you pay on is a sign to the agencies that you are able to handle a variety of credit options. Be sure that you are able to handle all of them, though, as not paying on time on even one type can count against you.
- 15% of your credit score is determined by how long you have had a credit history. Of course, the better you have handled that credit over the years, the better it will be for your score. But it’s still better to have a more established credit record than a shorter one.
- Second in weight to your payment history is the total amount you owe. This factor accounts for 30% of your score. The total amount you owe is compared to your income in what’s known as the “debt to income” ratio. The lower, the better. You should aim to keep your total debt at 25% or less of your annual income to have the best effect on your rating.
- New inquiries into your credit are a warning sign that you may be overextending yourself and account for 10% of your total score. The one exception is if you are the one looking at your credit report.
As you can see, there is no real mystery when it comes to your credit score breakdown. Knowing how much weight is given to each portion of your score can help you decide where to first focus your efforts when you start trying to improve your credit score.
Having trouble sleeping because of credit problems? You only need to invest in one credit repair solution, so why not use the best? CHECK IT OUT
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