Beginners Guide to Credit Repair and Debt Consolidation
The best kept get out of debt secrets
Having and maintaining a great credit score and low debt is paramount in todays credit crazy culture.
In todays economy you need to purchase many items with a credit card like airline tickets, online purchases etc. so good credit is essential to your financial health.
If you have bad credit or poor credit then you will need to find ways imporove your credit report now.
This can easily be done with credit help counseling, or credit repair services that will review credit repair techniques and debt consolidation strategies that work for you.
When do I Need Credit Repair Advice?
In the current world that is witnessing skyrocketing prices of goods,
huge level of inflation and increasing debts and taxes,
it is time for you to sit down and ponder about clearing off your credit card debts and other loans you’ve taken,
before your creditors come down upon you and make you go completely bankrupt.
Tyler Gregory stated that “If you don’t take good care of your credit, then your credit won’t take good care you.”
This statement is very valid in today’s scenario where people fret and worry more about a low credit score and dwindling bank balance than anything else.
It is highly important that you stay aware and updated about mind boggling, yet essential…
…terms that will haunt you for days to come.
Also acquaint yourselve with ways to resolve them, in case you fall into such situations.
You must have heard the term called “credit repair” many a times over casual chats with your friends.
If you’ve ever had a poor credit score (below 601), you should probably sit upright and read through this entirely.
Here is a step by step credit repair and debt consolidation strategies presented to you in the simplist and most easily understandable way.
Here is the Deal:
Understanding Credit Repair and Debt Consolidation
credit repair basically involves fixing a bad credit in any form and shape, disputing errors on credit reports.
In order to deal with dispute process you can approach the credit bureaus and complete the process for no fee by yourselves.
You would be required to file a formal dispute with the credit bureaus either online or through mail.
This formal dispute presents a detailed explanation of the error, which needs to be supported with the required documents along with it.
In case you are unable to resolve the issue, you can seek a credit repair specialist or get help from a credit repair company that offers a credit repair program that will dispute errors on your behalf.
But before venturing into hiring process (if you plan to submit your case to such organizations) let’s quickly understand the basics of Credit Repair Organizations Act.
Credit Repair Organizations Act, a federal law that came into effect on April 1, 1997,
when large number of consumers suffered from credit repair scams ensures that credit repair service providers are…
…Prevented from taking money from the consumers until their services are fully catered to
Providing a written contract stating all the services they provide,
along with the terms and conditions for the payment.
As per the law, consumers can withdraw from the contract within three days.
Prohibited from making false claims with respect to the services that they intend to offer to the consumers.
Forbidden from asking the consumers to sign any document that leads to forfeiting of their rights under this Act.
You Might be Wondering:
Best Methods to Fix Credit Repair on Your Own
It is impossible for you to fix your credit quickly.
Repairing you credit is going to take some time. So be patient.
Information about your delinquencies and late payments are reflected on the credit report and will remain as such for many years..
However, here are a few steps that you need to follow to deal with your credit repair loan so that you build a positive credit history which will eventually improve your credit scores as well.
1. Keep a Check on Your Credit Report
You need to thoroughly check your credit report for getting a good grasp of your credit picture and what the creditors get to see in that.
You can always file a dispute, in case you find any incorrect information in the report.
For example, the items on your credit report that seem unrecognizable to you, can also mean presence of some fraudulent activity.
You need to have a clear understanding of fraudulent items vs. incorrect items given in the credit report.
2. Keep Track of Your Payment History
It is important to have a good payment history to show off as delayed or missed payments lead to lower credit scores, public records and collections may cause more damage.
This negative information stays on your credit report for 7-10 years.
Be aware that the more recent your missed payments are and the larger your credit debt is,
the lower your credit score will be.
A well maintained account and timely payment will boost your credit score higher.
3. Be Aware of Your Credit Utilization Rate
A credit utilization rate is the amount of outstanding balance compared the available amount of credit that can be accessed;
it is also called the “balance-to-limit ratio”.
That is, it is the total sum of all the revolving debt divided by total credit available (for that particular credit card, for example).
If the credit utilization rate remains high, your credit scores are sure to be impacted.
Ideal credit utilization rate is assumed to be below 30%.
In order to reduce the credit utilization rate either pay off all account balances to reduce the overall debt,
or increase your credit limit on the existing account or open a fresh account
in order to increase the total available credit.
But the second option surely is a risky one.
4. Manage Your Credit Accounts
Credit scores take into account each and every account you own and the amount you against each of them.
It is a good idea to pay off the debt against some of the accounts, in case you own more than one credit card.
Also, the more paid-off accounts or debt cleared accounts can be a plus in the overall credit mix as they are old accounts maintained in good standing.
5. Consider Your Credit History
It is a wise move to give a thought about your credit history before you close an account.
Credit scoring models often seek the age of an individual’s oldest account along with the average age of all other accounts,
in order to reward individuals with long credit history.
It is considered beneficial to retain an account whose debts have been cleared off.
6. Stay Wary of New Credit
A good credit repair tip to consider is to think extensively before opening several credit accounts in a short span of time.
This can be a risky procedure for the lenders and might later affect your credit scores.
Whatever inquiries you make, whether for buying a car or for mortgage rates, they will be grouped and considered a single inquiry for adding information to the credit report.
The inquiries into your credit report will negatively impact your credit score so be aware of this when applying for more credit or loans.
If you feel that your credit debts are getting out of control or too large to handle on your own…
…then you should seriously consider seeking a professional credit repair expert for advice.
You can get a free credit repair consultation from CuraDebt, one of America’s top credit repair and debt consolidation companies.
How Do Credit Repair Firms Help You
An established and experienced firm scrutinize credit reports from all the major credit reporting agencies and puts your credit issues on the table for you to understand.
This is because each credit reporting agency may have its own lenders, debt collectors,
…and credit card companies who will collect all the credit information and report the same to such agencies.
Chances of errors in any of these reports are high and it is important for the companies providing credit repair help to have a thorough information about the same.
In case errors or discrepancies are identified in your report, necessary documents have to be provided by the consumer to the credit repair company…
…in order to rectify those errors and generate an appropriate report for you.
How Can You Identify the Best Credit Repair Firm
it surely would be tough task to identify the right one to deal with your kind of problems.
Here are a few tips to consider, before you finalize a firm to do your job.
The company is aware of your rights and also helps you understand them.
Find a firm that genuinely explains you the consumer credit rights and answer all your questions.
If the firm is unable to do it, it’s a red flag that you should keep looking for a more knowledgeble firm.
The firm should understand the reason why a consumer wants to dispute an item on the report presented by the data furnishers and credit bureaus before they start offering solutions or sign a contract with them.
The company is able to explain how they can best represent a consumer to the credit bureaus.
A good credit repair company is the one that gives an accurate information about all the services they can and can’t provide before the consumer hires them.
So in case you are wondering as to how long the credit repair firms take to deal with your case and how much will they be charging you, here is what you need to know.
In order to remove negative and erroneous information off your report, the credit bureaus take a total of 30 days or less (exceptional cases may extend to 45 days) to respond and resolve a dispute.
The price of credit repair services offered by a firm depends upon the company, the state you reside, and the type of services you are seeking from them.
It is important that the consumer is aware of what type of services he requires and signs up for with the firm.
Another term that you need to understand when it comes to keeping your finances on check and debts at bay, is debt consolidation.
This procedure may sometimes be a boon in disguise as it will help you pay off most off your debts and relieve you off the constant stress and worry from them.
Let’s take a look into this method a little more in detail and understand how it is going to help us.
Debt Consolidation and the Methods Involved
Debt consolidation is the method wherein you take out a new loan so that you can pay off a number of unsecured debts – liabilities and consumer debts.
That is, you are attempting to combine multiple debts into a single, large piece of debt which can have better pay-off terms like low rates of interest, low monthly payment, etc.
This method is a common one when it comes to clearing off student loans and credit card debts.
A consumer can utilize numerous ways to combine all his debts into a single large chunk.
One possible method is to merge all credit card payments onto a new account, in case the credit charges very low or no interest at all for a particular time period.
Another option can be opting for balance transfer feature of a credit card.
Other forms of consumer debt consolidation methods can be going for home equity loans –
which is essentially a mortgage of your home until you pay your debts – as the rate of interests on the loan is deductible.
Major Advantages of Debt Consolidation
as debts are contacted frequently by the collection agencies,
owe accounts that charge high income rates and monthly payments,
are not able to negotiate lower rates of interests on loans and are having a tough time making payments for their debts, a debt consolidation strategy is an absolute necessity…
… as this plan will help you pay off your debts and never be troubled by the collection agencies.
But here is the kicker:
if your debt consolidation loan is backed up with an asset,
you can also qualify for a tax deduction as Internal Revenue System does not allow a consumer to deduct interest on any debt consolidation loans that is not secured with an asset.
In the case of the use of home equity, debt consolidation loans are tax deductible and thus such loans can help you improve your credit score.
Types of Debt Consolidation You Can Go for
Home Equity Loan
This is one of the most affordable and safe methods of consolidation as you have a choice of selling the house in case you are unable to pay your debts on time.
This method will, help you pay your debts and free you from them, making life easier and stress free.
You will be required to pay just one monthly payment, which will be way less than the total previous outstanding debts that you were paying.
Also, your lender can opt to pay other debts from the funds from home equity loan and ease you off some strain.
The major advantage of this loan is its tax deductible feature, thus proving to be the most essential form of debt consolidation plan.
Credit Cards Offering Low Rates of Interest
Now in case you do not wish to opt for home equity loans, as you don’t own a home, you can always opt for credit cards that offer very low or zero rate of interest.
Although there are high chances of getting signed up to a fraudulent credit card company that lure you into signing up with them…
…the best way to keep a check on them is to look out for such credit card companies that focus on the consumer’s’ credit score or sound credit.
You also have to focus on the terms and conditions put across to you by the company, before you give your final word.
Take these precautionary steps before agreeing to them:
Read their agreement thoroughly.
Take a note of the rate of interest that you will be required to pay after you sign with the company.
Always make your payments on time.
Even if you are late on one payment, the company can jack up their interest rates on you.
Have a keen eye for hidden charges and fees that may be present and can make the seemingly low interest look high.
Personal Debt Consolidation Loan
This method is a way to combine all your bills into one and pay them all off with a sigh of relief.
Personal debt consolidation loans generally bundle all the existing and current debts and gives you a lump sum for paying off your combined cards or debt with single lower interest rate bill.
Although this seems a good alternative, consider the following before you jump onto it:
Be aware of the terms and conditions of the consolidation loan you are planning to procure and ensure that it doesn’t burden you by adding onto the amount that you are currently paying.
As you have no asset to secure the loan, the lender will surely hike up the interest that they will charge you.
Poor credit leads to high rate of interest and the possibility of the getting your loan turned down by the lender.
So be prepared for the same.
Applying for loans at banks and credit unions is a much better option they offer better rates of interests to the members and thus save you from higher rates.
It is best to do a survey of rate of interests and their terms before settling down for any firm.
What’s the Bottom Line?
If you fall prey to mounting debts, you can choose appropriate credit repair and debt consolidation methods to free yourself from the clutches of debts.
This is not an area where you want to do it your self.
There are some areas of expertice that just requires calling in a top professional to help you out, and this is one of them.
(For me it is plumbing!)
One of the top debt consolidation and credit repair companies operating today is CuraDebt.
CuraDebt has received numerous awards and are always ranked at the top for customer satisfaction.
Just click this link NOW for your FREE Credit Consultation.
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