Debt consolidation has a unique appeal among its debtors since they have the potential in order to restructure debt. You could possibly get a lower payment on all of your debts and you can save tremendously on interest. The key to getting better terms with debt consolidation is having good credit.

Having a High Credit Score and its implications

You can easily convert your debts from higher interest to lower if you obtain a good credit score. The best way of maintaining good credit score is the smaller amount of unsecured loans.

Less Credit Score

Most debtors discover at a certain time that their credit score is going down through the high outstanding of their credit cards. If the situation continues, you will have difficulties to qualify for the loans of debt consolidation. However you can have loans with the help of finance companies. But finance companies charge a huge amount of interest which will affect your credit report.

There is an option available where you can replace the large number credit card balances with high interest rate to have just one high interest rate loan. But the problem with this option is that it doesn’t help your credit score picture. What is worse is that you might find yourself in such a tight situation that will make you opt for that credit card option all over again and the entire process will start over again. So not only will you be going around in circles but will also increase your amount of debt instead of lowering it.

The debtors who earn a good rate are the only ones who benefit from debt consolidation loans. They only benefit so until you have actually improved your credit score you should avoid the option of taking out any kinds of loans.

You credit card issuer can hold on to your balances while the credit card counseling agencies can consolidate the payments for your credit card. The benefit of this option is that the majority of the credit card issuers will allow you lower interest rates than their counterparts the debt management plan when you consolidate your payments with them.

You should contact a reputed credit counselor if you are interested in a debt management plan and would like to know more about the nuances of its proceedings. They will not only help you lower the cost of your interest rate but also advice you o other alternatives. This way you can enjoy both a decrease in interest rate and payment amount.

Tags: credit card debt, business credit, bad credit

by Jon Ochs

We have all heard the statement, “Credit repair is a scam!” You have read the negative news articles that state that you should stay away from credit repair companies, and that there is nothing a credit repair company can do for you that you cannot do yourself. The reality is that there are some credit repair scams out there, and there are a lot of credit repair companies that are not scams, but simply do not do a good job for their clients. Fortunately, there are a few simple things for you to know that will allow you to make an informed decision about enrolling in a credit repair program.

Let’s begin with defining what we mean by “scam”. People have a tendency to loosely describe everything they are not completely satisfied with, as a scam. This is not the correct use of the word. A scam is a deliberate process of separating you from your money without delivering the stated product or service in the manner promised. I can tell you from experience that as far as credit repair goes, most of what is being called a scam is really just a poor business model. I will now explain the credit repair business models used by nearly every credit repair company, and I think you begin to see why there is so much negativity surrounding the credit repair industry.

Here is an outline of the two most common business models for a credit repair service. After each one, I will outline the problems associated with it, then, I will show you a better way to do things:

Credit Repair Model 1: (this one is the most common)

Step 1: Setup fee of $50-$200 is charged and client agrees to an additional $20-$75 per month service fee.

Step 2: Client is then instructed to order their own credit reports by mail or online and send them to the credit repair company directly.

Step 3: Once the credit repair company receives client’s credit reports, they begin first disputing cycle (usually 30-45 days). At completion of cycle, the credit bureaus will mail updated credit reports to client. Client must review and mail them back to the credit repair company for work to continue.

Problems with model 1:

First, the number one problem is that the client has paid for services before any services have actually been delivered. The credit repair company will not do any work until they have received the credit reports. So, my biggest question is what is the justification for the setup fee? The monthly fee is also questionable because whether you send in your updated reports or not, they will still continue to charge you a monthly fee even though they did not do anything for you.

The majority of complaints against credit repair companies state that the consumer was charged for services not rendered. The Federal Credit Repair Organizations Act (CROA) clearly states that a credit repair company can only charge for services that have already been performed. If this is the case, why are all these companies charging before they perform services? Located in the fine print of most of the credit repair company contracts it is stated that the monthly fee is being billed for services performed the previous month. It is simply a technicality that they are currently getting away with. This has not gone unnoticed by government and state officials. In fact, many credit repair companies have been shut down and fined in the past few years, but it seems that kind of action requires a huge number of complaints.

The next problem is that most people have difficulty obtaining their credit reports in a timely manner. Most are unaware of all the different versions of credit reports that are available today online. The most effective credit reports for credit repair can only be obtained directly from Equifax, Experian, and Transunion (these are the three major credit bureaus). There are a variety of reasons the credit bureaus make it difficult to get your credit reports directly. Often people will give up without even getting their reports, and then attempt getting their money back that they have already paid to the credit repair company. Since this money has already been absorbed as income by the credit repair company, it can often be difficult, if not impossible to get it refunded.

Model 2:

Step 1: A one-time service fee of $300-$2,000 is charged upon enrollment. This is payment in full for services that have not yet been performed.

Step 2: Client is instructed to order their own credit reports by mail or online and forward them to the credit repair company.

Step 3: Credit repair company receives client’s credit reports and begins first disputing cycle (usually 30-45 days). At completion of cycle, the credit bureaus will mail updated credit reports to consumer. Client must review and mail them back to the credit repair company for work to continue.

Problems with model 2:

The number one problem here is that you are paying in full for services not yet performed. This is directly against the federal guidelines for how a credit repair company is to operate. This is how many very small credit repair companies operate because they do not have enough operating capital to perform services before payment. This means that if they do not perform services to your satisfaction, and you ask for your money back, you may find that they don’t have the money to refund you. When it comes to this type of company, it is “buyers beware”. Also note that once they have your money, there is no longer a lot of motivation for them to continue working on your credit. Will they continue to follow up with you to make sure you received your updated reports? How long are they willing to work on your case?

A better credit repair model: Now I will outline a much better model. This one puts the client first, and puts the entire burden on the credit repair company to produce results before any payment.

Step 1: Consultation and Credit Evaluation. This is provided free, and can easily be done over the phone in a few minutes. This allows for a client to determine if credit repair is appropriate, get some advice about their credit, and get assistance obtaining their reports from each of the three credit bureaus.

Step 2: Credit Repair Estimate. This is also free. Credit reports are reviewed and an estimate for credit repair is provided. It is clearly laid out so that the consumer can see that they will only be charged if and when a derogitory item is corrected or deleted. There are no other fees, period.

Step 3: Program Enrollment, Payment Setup, and Begin Services. After a client has approved a credit repair estimate, is the payment arrangement setup. This is a progressive, performance-based payment model. The client makes automated deposits into a deposit account to cover any earned fees during the course of the program. Fees are only earned when the credit repair company corrects or deletes a negative credit item. If no credit items are fixed, the credit repair company does not earn any money, and the client is refunded the entire balance of the deposit account if and when they choose to cancel their program. Keep in mind that since the credit repair company assisted the client in obtaining their credit reports, they are ready to get started with the services immediately upon approval of the estimate. The client is litterally walked through each step.

An additional note about Licensing and Bonding: There are currently only a few states that require a credit repair company to be licensed and bonded, so most companies are not. The advantage of working with a company that is licensed and bonded is that they have undergone scrutiny by both the state in which they operate, as well as the insurance company that has bonded them. They have also been required to put up collateral, or show significant business capital to ensure that they can be held liable for their client’s money. Understanding how most of the credit repair companies operate, I would highly suggest that you only work with one that is licensed and bonded.

My professional opinion is that this is the only way to run a credit repair company. As you can see in the last model explained, everything is centered on the client’s needs, and requires good communication with the client throughout the program for fees to be earned. It puts the motivation on the company to provide excellent services, instead of on the client to make sure the company is doing what they are supposed to do.

I have yet to find another company doing business in this manner, and am sure the reason is because it is a lot more difficult and less profitable from a company perspective. However, doing right by the client will ensure a long-standing business, and a steady stream of referral clients. If more companies would take this responsible approach, there would not be so many claims of scams.

Now that you are armed with this valuable insight into the credit repair industry, you will be able to make a more informed decision about the credit repair company you choose to work with.

Article kindly provided by http://www.alluniquearticles.com/

Jon Ochs has over 12 years experience in the credit and debt industry and is the founder/CEO of NCA Credit Repair, one of the most trusted and respected Credit Report Repair companies in the nation. This and other unique content ‘credit repair’ articles are available with free reprint rights.

Tags: credit counseling, credit, credit rating

by John Wiley

The ‘Free’ portion of a ‘Free Debt Consolidation’

Debt consolidation is about taking out a loan to pay off several others. This is most often done in order to secure a fixed interest rate, for the convenience of servicing only one loan or to secure a lower interest rate.

Debt consolidation may be from several unsecured loans to another unsecured loan, but mostly it refers to a secured loan that is taken against an asset, which serves as a collateral, which is most commonly a house.

The ‘Free’ Part of ‘Free Debt Consolidation’

Actually there are Free Debt Consolidation firms that provide you with free Debt Consolidation services. They are the non-profit group of firms.

They will not only give you advise on how you can manage your debt but also your funds so that you don’t find your self in the similar situation again. They will also provide you with free credit counsel so that you can manage you credit better and not incur any penalty.

To help you bring down the amount of debt you have already incurred, they will provide you with professional negation help to deal with your creditors. More time for paying off the amount of debt will also be in the negation plate so you can find it easier to pay off the debt at a pace you are more comfortable with.

They will also distribute the amount of debt you can pay off monthly and help you formulate a plan you can actually follow. They will even take care of the problem of remembering the different due dates of all the different credit cards you have.

They will provide you with all these services for free. It is a mutually beneficial venture because on one hand you will be free of the stress of creditors hounding you all the time and they will get some money out of the whole process at a regular interval.

But this kind of debt consolidation firms will be useless if you want to take a loan. As a loan is definitely won’t be free. But the rate of interest will be lesser than credit card firms.

Points to take note of and be Cautious about

There are some dishonest companies who are always looking for a chance to cheat you. So you have to look for unseen charges and fees and gather all other valuable information about your chosen Debt Consolidation Company.

Another important thing you should check before trusting a debt consolidation firm is its track record. They may delay to distribute your money on behalf of you and the one who is going to be penalized for this issue is you.

Some unscrupulous companies try to cheat people who are already in trouble. So be informed about the debt Consolidation Company you choose, look for hidden fees and charges that may come behind the pretense of ‘free debt consolidation’.

Don’t forget to check the company’s track record before giving them money to distribute on your behalf. They may delay it and collect interest whereas you might land up getting penalized.

Hence, never jump at the first free debt consolidation offer you get. Be a consumer that is well informed thereby reaping the best benefits through free debt consolidation.

About the Author:

John Wiley is a debt consolidation professional. Don’t reprint this exact article. Instead, reprint a free unique content version of this same article.

Tags: bad credit, credit report score, credit repair

by RoseMarie Pierre

The Attorney’s Guide to Credit Repair was written by David Shapiro a financial services lawyer with 27 years of experience in the business. He has earned for himself a reputation as an expert in the area of credit restoration.

Shapiro uses the federal law, the Fair Credit Reporting Act (F.C.R.A), passed in May 25,1970, to create the step by step method of his book.

Shapiro uses the law to remove negative credit entries that are not 100% accurate and verifiable, and he also uses the fact that 80% of entries in the three major credit bureaus (Trans Union, Equifax and Experian) are also inaccurate and requests their removal.

In The Attorney’s Guide to Credit Repair Shapiro debunks the myth that is propagated by the credit card companies and the banks that bad credit will be on a consumer’s record for up to ten years and that nothing but the passing of time will cure.

It is a sad fact that many consumers suffer with bad credit on their credit reports for longer that they need to because of the misinformation they receive and accept.

The step by step method Shapiro uses in his book will improve the consumers’ Fico score. He uses the F.C.R.A law and the inaccurate information dispute process of the credit bureaus to accomplish that.

He explains how the the Fico score affects approval for credit and how points can be added to the credit report by removing inquires from the report. He provides carefully crafted dispute letters for consumers to forward to the credit bureaus.

The guide will allow anyone to get the credit they need to change their lifestyles and achieve their goals. The Attorney’s Guide to Credit Repair uses unique techniques, is written in an easy step by step fashion to erase bad credit and raise the credit score in a very short amount of time.

Because the current laws allow for the removal of any credit entry that is not 100% accurate and verifiable, The Attorney’s Guide to Credit Repair is guaranteed to increase the Fico score.

Article kindly provided by http://www.alluniquearticles.com/

Raise your FICO score by 200 points. Get David Shapiro’s excellent free credit repair course The Attorney’s Guide to Credit Repair, and FICO Score Info Click here to get your own unique version of this article.

Tags: business credit, credit check, credit card debt