Clear up Your Financial Situation with Debt Consolidation/Credit Counseling Programs

When it comes to debt consolidation, it will do you no good to obtain that loan and payoff your debts if you don’t learn how to better manage your money, to keep from going into debt again in the future. If your credit has been impacted already, and you don’t have sufficient collateral to obtain a debt consolidation loan, then you may end up having to use a credit counseling company to help you manage your debt, and learn how to budget and handle money better.

When you call or email a credit counseling organization, such as Money Management International for one, you will likely first talk with a certified counselor. The counselor will talk with you about your current financial situation, the cause of the situation, and take a look at your income and debts, to help you decide the best route for you to take to clear everything up. In some instances, you may be so far in debt that there is nothing they can do for you, so they may suggest that you go ahead and start the bankruptcy process, but this is a rare occurrence. Typically, they will help set you up with a program, called a Debt Management Program that is designed to help you get out of debt, and learn about financial management in the process.

The counselor will take a close look at your credit report and your income, and will help come up with a budget and a payment amount that you can afford. They will then contact your creditors, and try to negotiate to get your payments lowered down as far as possible, the interest rates slashed, and the fees stopped, so that more of your money is used to payoff your bills. Once the creditors notify the counselor that they have accepted their terms, you will make one monthly payment to the counseling agency that will then be sent to your creditors each month.

There are many companies all over television and the Internet that claim to be certified credit counseling agencies, but you should really take the time to do your homework, as not all of them are legitimate. You may want to check with the Better Business Bureau, and other sources to verify the reputation and validity of a company before disclosing your personal information or sending any money to them.

Some people are concerned that enrolling in such a program will only further impact their credit rating, but that really is not the case. You should look at your report prior to starting the program, and then check it randomly afterwards, to make certain your payments are being credited properly, and that your accounts are no longer being reported in a negative way. You should know that with the new laws surrounding bankruptcy, you are required to be in a program such as this for at least six months, before you can file. The hope is that you will find that the Debt Management Plan will work so well for you that you will no longer feel the need to file bankruptcy, and that you will learn money management skills that will keep you from getting into a similar situation in the future!

How To Improve Your Credit Score

We all get reminders in the mail by the way of a bill to make our monthly payments. The monthly credit card statement will show our purchases over the last month. Make sure you review it to make sure there are no errors or information that is incorrect. If you are interested in obtaining more credit and apply for a higher limit and are denied, you may want to look at your credit score.

Understanding Your Credit Score

If you are not aware of your credit score and plan on applying for a credit card or buy a house, you will certainly find out your credit score quickly. Your lender will request that information.

Your credit score is based on a variety of elements including your history of making payments, the amount of debt that you have, how long you have obtained credit, if you are a new creditor and the types of credit you have had and used in the past.

The 3 large credit bureaus, Equifax, Trans Union and Experian, manage and formulate the credit scores. Each one has a different means of determining the individual’s overall credit score.

As you know, or will find out your credit score is very important. When a lender is considering loan money to you, they put themselves at risk that you will not pay them back in a timely fashion or at all. However, they are collecting interest, which is essentially how they are paid back.

So the creditor is investigating you to determine if you are a good credit risk or not. They will request your credit score and then make that determination.

If you have a low credit score you will pay a higher interest rate and you will have a harder time obtaining credit. However, a high credit score will mean lower rates and low monthly payments.

Credit scores are an easy way for lenders to obtain a lot of information about quickly so that they can make a fast decision. If you are applying for a loan, you will certainly want to know as quickly as possible if you are approved or not.

The object is to keep credit scoring objective free. So decisions are not made based on a person’s sex, religion or other factors which may be perceived as discriminatory.

This helps streamline the process and make it quick and relatively painless for everyone involved.

Checking Your Credit Score

If you are trying to obtain a car loan or buying a house, you will want to make sure you know what your credit score is. The decision regarding whether you will obtain credit and your interest rate will most likely be determined by your credit score.