More on debt consolidation

A view of somone trying to sell you debt consolidation text:

Make your pestering debt problems a thing of past with our debt consolidation services. Your search for a quality debt consolidation service ends with the American Credit Foundation. Whether your goal is to avoid filing bankruptcy, put an end to your creditor harassment, lower your debt payments up to 50% or provide a single monthly payment, debt consolidation can be the remedy. Get a fresh start and bounce back to healthy personal finances with our debt consolidation services. You can apply for a debt consolidation consultation regardless of whether you are on time, or behind in making your payments to your creditors. Many people across the states have already benefited from our debt consolidation program. Shouldn’t you be the next one to benefit from our great customer service? If so, what are you waiting for? Get in touch with us today by submitting some brief information about yourself and your financial situation, and our certified credit counselors will walk you through the program and get you set up in no time.

Discover how you can extract yourself from your debt problems and financial hassles quickly with our debt consolidation services. We provide you a powerful way that helps you take control of your finances and consolidate your debts. Our courteous credit counselors will take the time to help guide you through a full budget analysis. This will help you to determine your spending habits and will also help you to identify wants versus needs. This is a critical step in getting your finances under control. In order to have a successful debt consolidation program you need to take charge of your spending, and possibly do without some of the “wants” during the debt consolidation timeframe. You will find that with a small amount of effort on your part the debt consolidation program will get you out of debt in approximately on third the normal time and save you thousands of dollars.

1 2 3 of Debt Consolidation Loan

You can consider various different options when looking at debt consolidation loans. Make sure that you consider interest rates and upfront fees when shopping around for a deb consolidation loan.

1. Lowest interest rates are usually offered by home equity loans. The interest you pay may be tax deductible because the are a type of mortgage.
2. If you don't own a home or don not want to put your house up as collateral, another method of consolidation your debt could be to take out a personal loan. These types of loans usually have higher interest rates than home equity loans but are much lower than credit card interest rates.
3. You could cash-out refinance. This means that you take out a new mortgage on your home that is larger than your current mortgage loan and use the money to pay off credit card debts or even a car loan. The amount of interest you pay will usually be greatly reduced with this method.

Your Credit Score Explained

Credit score is a formula used by lenders from your credit report compared to that of many others to determine your credit worthiness, i.e how much they believe you can really pay back and that affects how much you can borrow. The higher the number of your credit score the better you look to the lender and the lower the interest rate you receive.

You Credit Worthiness
FICO, created by Fair Issac is the most popular system used to assess credit risk. With the FICO system data about you is collected from three main credit bureaus (TransUnion, Equifax and Experian). They do not really asses your income as some people have very high incomes but they never pay their bills. The factors they do consider include: debt, the type of credit you use, the length of your credit history, your new credit and most important of all your payment history. This is then uses to tally up a score between 300 and 850 in order to ascertain your credit worth. The higher the number the lower your interest rate.




Can I Check My Credit Reports ?

1. You are entitled to get a free credit report once annually from the three main bureaus listed above. You can do this by calling 1-877-322-8228 or visiting annualcreditreport.com
2. Checking your report does not affect your credit worth score.
3. If you dispute something on the report (which you are also entitled to do) keep in mind that this is considered a hard enquiry and this in itself will affect your credit score. This stays on your records for 3 years.
4. The cost of one report is $14.95 or you can purchase all three reports for $44.85.
5. Lenders look for trends when assessing your credit score so one late payment alone should not make much difference.
   
6. FICO records go back 7 years, however most lenders tend to look at just the last two years.
   

Credit Card Debt Engulfing American Families

American consumers have created a $900 Billion dollar credit card debt, this works out roughly to an average of $9000 debt per family in America. We can not just blame the credit card consumers keen and irresponsible use for of credit cards for these figures, lenders are also to blame for creating schemes that are unfair and trap the consumer into debts that they are not qualified to pay off.



The Senate is proposing to pass a law which will stop lenders being able to raise interest rates on amounts of money already borrowed. If this move goes ahead it will indeed provide some credit card relief for the American population as a whole.

Credit Card Debt Relief Information and Alternatives

It is very easy to fall into the credit card debt trap what with even your household dog being able to take out a credit card under his name these days. These big companies know what they are doing too and they really have no shame in giving people credit card limits which are beyond what their incomes can stretch to.




Let's look at possible options for helping you dig yourself out of that trap and to find credit card debt relief:

Things to Consider Before Choosing a Credit Card
A credit card interest rate is way more than what you pay in a mortgage. If you are aware that you will probably not ever be able to pay it all back then choose a credit card with a lower interest rate as opposed to one that has a fixed interest free time period.

Credit Card Reward Schemes
These do not come into play and you should never think that a credit card is worth getting for point as a) you need to spend about 20K to null your $100 credit card annual fee (or whatever the fee is) and b) these are points you will most likely never redeem in any way so it is really all an illusion.

How to Avoid Credit Card Debt

1. Cut up your card immediately so you STOP using it.
2. Use your savings to pay off the debt. You are getting about 2% interest for savings and are paying 15% - 20% on your credit card, do the maths, you are hemorrhaging money.
3. Pay more than the minimum balance. If you only ever pay the minimum you will never pay the principal off so essentially you will always have this debt and be paying monthly for the privilege of having this debt.
4. Sometimes you need a credit card to pay online tickets and other such things. Only have one credit card with a small balance for these purposes only.
5. A great alternative to using a credit card is to use a visa debit card that takes the cash amount out of your savings.
   

Debt Consolidation Advantages and Disadvantages

Debt Consolidations means taking out one big loan to cover and manage all your little loans. Debt consolidation can work in many cases but is not really a good idea in others.

Before Considering a Debt Consolidation Loan

Have a look at what other options you have on offer.

1. Borrowing from friends or relatives
2. Speaking to current creditors to see if you can rearrange your payments or what other options you have with them
3. Making sure you are making the most of your existing options such as: overdraft facilities, personal loans etc

Advantages of Consolidation Loans

1. Put you in charge of your finances
2. Pay off priority debts
3. Single Monthly payment is easier to manage than many smaller repayments which can be harder to keep track off
   
4. You will know when you will pay off all your debts
5. You won't fall behind on your payments
6. You can avoid getting a bad credit rating
7. All over interest rate may be lower, be wary of companies stating that they can reduce your all over debt, it is only the interest rate that they may be able to reduce, the debt you have to still pay off
8. Avoiding bankruptcy
9. Stop receiving calls and letters from debt collectors immediately

Disadvantages of Consolidation Loans

1. Extra fees for setting up and managing loan
2. If loan secured against your home you could be at risk of losing your house if you cannot repay
3. May end up paying overall more in interest
4. These types of loans are based on risk, if you pose a big risk to the lender you may get a loan with an extremely high interest rate or be denied a loan all together
5. You need to have collateral to get these types of loans, if you do not have collateral then usually debt consolidation loans will not be offered to you
6. Not all companies that offer these loans have your best interests at heart. Be wary of those with high fees and hidden charges.
   

Debt Consolidation Some Steps Towards Gaining Control Again

It is very easy to suffer from a debt crisis, it happens slowly over time and before you know it it's taking over your life.

Here are some options that you have in your power to free yourself from debt and live a much easier sustainable life.

Realise and accept that you have a debt problem
The first move towards becoming debt free is firstly to acknowledge that you are in a financial crisis. Leaving bills unpaid or ignoring them will only make your situation worse. The good news is that if you are already reading this blog then you have already taken this step.

Become aware of your current financial situation
Make a list of all your debts including the creditor, how much you owe and the interest rate they are charging you and the monthly repayment you are making towards the debt. This is important in giving you a clear overall picture of your financial situation and will help in assisting you to find the correct debt solution.

Debt prioritization
Now that you have your list you can assess which debts need to be payed off first and which ones can be postponed for a bit. It is a good idea to pay off the debts that carry the higher interest rates first and in the long run this will save you more money and you can just pay off then minimum on the others while you clear these ones out. It is a good idea to always pay off more than the minimum otherwise you are only really paying off the interest and not the principal which means that your debt never ends.

Create a realistic monthly budget.
Have a look at your essential expenses and subtract them from your monthly income and you will see how much you have that you can dedicate to paying off your loans. Now is a good time to totally cut off or cut down on non essential costs such as going to the movies, eating out etc.

NO MORE NEW DEBT
Do not take on any more new debt no matter what.

Contact Creditors
Call your creditors and advise them of your financial crisis, they will help you sort out a repayment structure.