Credit management is a necessary skill for anyone who wants to handle loans in a responsible way. Loans include unsecured debt such as:
- Credit cards
- Student loans
- Store lines of credit
- Personal bank loans
Managing your loans doesn’t have to be difficult. One common strategy many people are using is known as debt consolidation. Consolidation involves taking all of your loans and rolling them into one low-interest rate monthly payment. You will pay off your loans much faster because of the lower interest rates, and in many cases you can waive any fees or other loan expenses preventing you from paying down your loan more quickly.
How Credit Consolidation Works
The process of consolidating your credit card debt begins when you contact a credit consolidation service. This service will work with you to figure out your debt levels as well as your income and expenses to provide a monthly payment that you can afford. The service will then contact all of your creditors and negotiate with them to help get you better deals on your loans. It will then pay the loans on a monthly basis so that your creditors are satisfied and your credit score goes up.
In return, you will pay the service a low monthly fee that is often less than or equal to the amount of money you currently pay in loans. It’s a win-win situation for you, because you save money each month as well as over the lifetime of your loan. Debtors have saved thousands of dollars just in interest rate payments and have paid off their loans up to six times faster than if they had just continued making minimum payments.
Many debt consolidation services also offer credit counseling, which is a type of assistance for people who need education and tips on how to manage their money. Budgeting, savings, five-year financial plans and other money management techniques will be discussed. A professional counselor will go over your finances and help you figure out how you can get the most money out of what you make. Tips for staying frugal and within budget as well as suggestions for how to save will also be discussed.
If you think it’s time to get rid of your credit card debt for good, consider a credit consolidation service today.more info
Your credit score is one of your most important financial indicators. It represents the level of risk you hold for banks and lenders when it comes to lending money to you. Your credit score is affected by a variety of factors, chief among them being how much debt you hold, how reliable you are about paying off your debts and how often you apply for new loans.
Your score will determine whether you can make big-ticket purchases like a car or a home as well as impact the interest rates you receive on everything from student loans to business loans. It is therefore a number that can seriously impact your future dreams, so you want to make sure to keep it high. If it is middling or low, you want to do everything you can to get it up.
How Debt Consolidation Helps Your Credit Score
Debt consolidation companies like CreditGuard of America offer a credit-friendly way for you to get out of debt quickly. They do so through three crucial elements of the process:
- No additional loans
- Reduced interest rates to make loans easier to pay
- Regular payments every month so you don’t forget
These are part of every legitimate debt consolidation business model. If you come across someone selling “debt consolidation” but asking you to take out an additional loan, don’t do it. You could be getting your credit score into more trouble than it’s worth.
Reduced Interest Rates
Consolidating your debt involves getting you lower interest rates so your monthly payments are much less than they would otherwise be. This makes your money go further toward helping your credit score go up. Studies show that debt consolidation can help you pay off a debt (that would otherwise take 30 years to disappear) within five years or less. By getting rid of your debt load in a consistent and timely manner, your credit score will rise.
Credit Counseling for a Better Credit Score in the Future
Even once all your debt is gone, you still have to keep an eye on your credit score to keep you eligible for good interest rates on necessary debt such as a mortgage, car loan or student loan. Credit counseling provides the financial skills you need to keep your credit score high. By sticking to a budget, managing your finances effectively and living within your means, your credit score will reward you by getting you better deals with lenders.more info
Credit card debt is one of the top causes for financial problems. High interest rates hold your future hostage to the terms of your loan agreements. Paying your monthly interest charges takes a lot of money (money that could be used for other purposes), but these expensive monthly bills make it nearly impossible to get out of debt because your balances stay high. Debt consolidation offers the best way to reduce your balances and free up more of your monthly income.
Debt Scams Cause More Financial Problems
Legitimate debt consolidation includes consumer credit counseling and professional negotiations to persuade your creditors to lower interest rates. Unfortunately, less reliable companies offer various schemes such as transferring unsecured debts to secured loans or ruining your credit by trying to settle your debts by refusing to pay them. These schemes include paying large fees to the companies. You should avoid these programs and choose nonprofit debt consolidation companies instead.
Benefits of Debt Consolidation
A company like Credit Guard can stop annoying collection calls and create unique repayment plans based on people’s income and resources. An expert financial counselor will study your situation and come up with a custom debt management plan. He or she will encourage creditors to lower their interest rates and will consolidate monthly payments into one bill while also dropping fees and penalties. The following are some other benefits of debt consolidation services:
- You will still repay your balances and preserve your credit rating, but your payments drop because you pay less interest each month.
- Financial counseling can help you learn to create a workable budget and reduce monthly spending.
- Even if you decide that a debt management plan is not necessary, financial counseling can help you strengthen your money-management skills.
- Educational materials can help you understand credit issues better so that you don’t make costly mistakes.
Other Useful Debt Management Advice
Computer software and online applications can help you create a budget, save money, balance your checkbook and get out of debt. You can also contact a debt consolidation program online in strict confidence and make plans conveniently from your home. For more advice on harnessing debt, consider the following tips:
- Avoid eating out, and learn to cook healthy, affordable meals at home.
- Use coupons and bulk purchases to save on those products that you buy often.
- Use financial windfalls, such as tax returns, to pay down your unsecured debts. You’ll get more for your money because you’ll save on interest charges each month.
- Always contact your creditors if you can’t make payments on time. Explain why you’re having difficulties, and lending companies might offer lower payments or special repayment plans to help you manage your finances
Consolidating credit card debt will help you stretch your income further each month and pay off your balances in months instead of years. Debt consolidation offers real benefits for people in debt and those who wish to pay less interest.more info