Reasons Why You Shouldnt Go For A Debt Settlement Offer

Debt Consolidation- Help or Hurt Your Credit



Thousands of Americans are in a deep hole called debt. They love to spend money so much so that they spend it even when they dont have it. But most Americans have experienced some form of this and we know exactly what it feels like.

It feels terrible. It can get so bad that it feels like youll never get out. Actually there are people that live a lifetime in debt. Some people can never stop spending and others never learn that theres a way to pay off debt and live debt-free.

So if youre in that deep, dark place, there is help. There are a few different ways to clean up your credit report and raise your credit score. But here is a focus on debt consolidation. Youve seen a bunch of advertising for debt consolidation. Many people see these commercials and wonder if they really work.

Well it all depends on the company that you choose to work with. Just like with anything else in this world there are snakes in this business. They are waiting out there to come upon people that need help and they strike. They take your money and leave you with nothing in return. You cant get rid of these snakes, but you can be careful and keep away from them.

On the other hand, there are plenty of debt consolidation companies out there that will really help you. If youre paying on a number of debts then debt consolidation may be just the answer youre looking for.

So what is debt consolidation? Debt consolidation is when you take a bunch of different debts and combine them into one. Instead of paying ten different companies each month, you would just have to pay one. This is beneficial in a few different ways.

Its a lot less stressful keeping track of just one payment instead of ten payments. Its also helpful in the way of paying interest on your debt. If you have a few high interest rates, or even one, then youre losing thousands of dollars in the long run. If you take all of your debts and combine them to one then youll only be paying one lower interest rate; you will save thousands of dollars over your lifetime.

The biggest concern when it comes to debt consolidation is whether it will hurt your credit score. Debt consolidation alone should not hurt your credit score. But you will have to do a few things to ensure this.

When you pay off those old accounts, you need to consider whether or not to close the account. Its important to know that when it comes to your credit score, older credit accounts do more for you. If you have new accounts, close those first. The older accounts will establish a long credit history for you, which will help your credit score.

Its also extremely important when you close any credit account to write a letter to the creditor and request that its reported as being closed on your request. If you dont do this they may report it as being closed by the creditor and it will look bad to future creditors.

A lot of times debt consolidation companies will negotiate with your creditors. Often times they will accept a debt settlement on your behalf. This is something that can possibly hurt your credit score. The reason it would hurt your credit score is that the debt consolidation company does not pay your bill for a few months while the debt is in negotiation. This then appears as late payments on your credit report and will hurt your credit score.

Negotiation may also look bad to future debtors. When a debt is negotiated it shows on your credit report. Future debtors can see that you had a debt that you were unable to pay. This doesnt make the best impression on someone that you want to borrow money from.

Debt consolidation can be an extremely helpful tool. It really depends on which company you use, what methods they use, and how you manage your bills in the future. But with determination and discipline anyone can get their debt consolidated and paid off.

Increases in your cash reserves or a deduction in your overall debt ratio will also allow you to succeed in getting lower rates.

A Quickie Guide to Understanding what a Credit Bureau Does



A credit bureau is a company that keeps credit history information about consumers. When you buy something, it could be anything; you may use some sort of credit. Whether its a credit card, in store credit, a cell phone company, a bank, or a credit union, they all report your credit information back to a credit bureau.

The credit bureau takes the information theyre given and puts together a whole file about your credit history. Every consumer that uses some sort of credit has a file and when you apply for credit with a bank, Credit Card Company, a home loan, or anything else of that nature, the creditor will pull up your credit report to see your credit history.

After the credit bureau has your file all put together they sell it. Whoever has a legitimate reason to view your credit history, can pay a fee and get a copy of your credit report.

There are a lot of credit bureaus out there. Local and regional credit bureaus throughout the United States total over 1000. But each of these smaller credit bureaus are owned by or contracted with one of the three major credit-reporting agencies.

Equifax, Experian, and TransUnion are the three largest credit-reporting agencies. Each of them together keeps credit information for more than 170 million Americans. The information in the credit reports do not rate the consumers credit in any way. The credit bureau simply takes all the information theyre given and compiles it together for prospective creditors to view.

In your credit report, there is a lot of information for prospective creditors to view. The credit bureaus break down the information into four different categories. The first category is your identifying information. This includes your: name, current and previous addresses, phone number, social security number, current and previous employers, and date of birth.

The next category is your credit history. In this section prospective creditors will be able to see your history of bill paying with different creditors including: retail stores, mortgage companies, banks, and finance companies.

The third category is the public records area. Here information that is reported includes: tax liens, court judgments, and bankruptcies.

The last category thats reported on your credit report is the inquiries. This area contains a list of people that have received your credit report. These people or companies can include: employers, banks, rental agencies, mortgage companies, retail stores, or anyone else that accessed your credit report. Included in this section are also names and addresses of other companies that have received your contact information in order to offer you credit. These companies did not receive your credit information though, only your name and address.

Dont worry--its not just anybody that can access your credit report. The credit bureaus can only release your information to certain businesses or individuals that have permissible purpose.

As mentioned earlier, the Fair Credit Reporting Act has rules that the credit bureaus have to follow in order to ensure the rights of the consumers. Under this act permissible purpose is only granted to someone that needs to look at your credit report for insurance purposes, credit purposes, a business transaction that the consumer requested, and for determining eligibility for some kind of government benefits. If somebody does get a copy of your credit report illegally they can be punished by serving up to a year in jail.

Employers can also access your credit report with your written permission. Its not the same version of your report that prospective creditors will see though. The version that employers see is not as detailed as the other because they use it for different reasons and your account numbers are taken out for your protection.

As you can see its not the credit bureau that gives you good or bad credit. Your credit score is really up to you. When you start building up credit you need to be responsible and have control over your spending. When you do this, your creditors will have good reports to give to the credit bureaus and they can put these good reports into your file.

If youve made some mistakes in the past, its okay. There are ways that you can repair your credit. Youll have to do some work and contact the credit bureaus and your creditors as well. Its definitely attainable though and its not difficult to do.