Succeeding With Credit Consolidation

You can succeed with credit consolidation which is comforting to know because you may easily become disheartened by the number of credit card bills filling your mailbox. All you need to do is not allow yourself to be overwhelmed by mounting credit card debt and instead take another look at taking control over your debts by beginning the process of proper credit management.

Credit consolidation gets easier if you start off by organizing and also beginning a suitable plan to manage your debts. You must try to create a chart that spells out all your debts and at the top of this chart you need to put down the name of each of your credit cards and then in special columns you must write down the credit limit, outstanding amounts owed by you, difference between limits and outstanding amounts, APR, annual fee, late fee and if you know it then write down the balance transfer fee. In addition, be sure to write down the date when each bill becomes due and also write down your phone number.

Once these details have been put in writing you must then proceed to set goals for yourself to help you eliminate all your debts. The best thing for you in this regard is to come up with suitable strategy to eliminate your debt though be sure to realize that such a step only works after you have stopped using your credit cards.

However, it does pay to consolidate your debt onto a single credit card and then you must cut up your other cards so that you don’t end up running up more credit card debts. It is also a good idea for you to manage your unsecured debts. This means paying careful attention to dealing with cards that invite annual fees.

Also be sure to evaluate the APR and eliminate debts on cards that have the highest APRs. Consolidating your debts is another good option that you may consider and for this you will have to scrutinize your cards to see which ones have debts that you can pay off first. Also, be sure to select the cards that have the least amount of APR and transfer maximum permissible debts to these cards.

Transfer balances may also be a sound approach, when doing so be sure to call your bank first instead of using balance transfer checks. You can also ask for a lower rate of interest and it also helps to ask if you can get the balance transfer fees waived off. Other choices open to you in regards to credit consolidation include eliminating your debts and dealing with credit card debt consolidation companies.

Understanding Your Credit Score

How Much Does a Low Fico or Beacon Score Cost You?

Do You Have Credit Cards?

If you have a low Fico or Beacon score you will be in the Jilted category, getting a good rate on a credit card is simply out of the question.  If you do get a credit card, you may be hit with high interest rates, upfront set-up fees, reoccurring monthly fees and cash deposits.

Auto Loans

Your payments on an automobile will go through the roof with bad credit.  Here are examples.
$20,000 auto loan over 5 years

Category	Interest Rate	Payment	Total Cost After 5 Years
Prime	7%	$405	$24,300
Subprime	14%	$477	$28,620
Hardy Money (Jilted)	21%	$557	$33,420

Mortgage

$100,000 home loan over 30 years

Category	Interest Rate	Payment	Total Cost After 30 Years
Prime	6.50%	$632	$228,625
Alternative A	7.50%	$699	$251,715
Subprime	10%	$877	$315,925
Hard Money (Jilted)	14%	$1,184	$426,553

Having a low score can cost you thousands of dollars.

 

Do you need to raise your credit score?

 

What Affects Your Credit Score?

There are 5 things used in calculating your overall credit score.

Payment History is 35% of your score
History of payments is determined by if you pay your accounts on time.  
Your history of payments includes any loan that you have had to make monthly payments on.  For I.E, auto loans, home loans, credit cards, retail stores and finance companies. 
If you are late on an account it can eventually turn into a collection account or public record.  These include, but are not limited to bankruptcies, lawsuits, liens, collections, wage attachments and judgments.  These are very serious accounts and hurt your FICO score dramatically.
Security- How delinquent is the payment?  Have you been 30, 60, 90 or 120 days late? Is it still outstanding?  Paying on time will increase your Beacon or Fico Score greatly.
Recent history- How long have you been delinquent?  Are you still delinquent?  Recent late payments can hurt your score by 100 points.
Prevalence- Obligations, how many do you have?  What percentages of your accounts are late now?

How Much You Owe is 30% of Your Score

Does your income allow you to make your payments and pay your home bills on time and still have money to spend on every day activities? 
What type of account is it?  Different kinds of credit accounts are figured differently. Credit cards are different than home loans in factoring your score or determining if you apply for a loan.
It is important to look at how much you owe total.  A lot of accounts with low balances may hurt you because you could run up those balances If you run into finacial trouble. If you have not used a credit card in longtime, you should use it to make a small purchase. That way the credit card company won’t close the account. Paying off your credit cards every month is good.  Try to keep the amount of credit cards you keep down to a minimum.  Three or four open credit cards are a good amount to have.
If your credit cards are almost maxed out, it is affecting your score, even if you have made your payments on time.  Banks do not want to see high balances because it shows that you may not have the money to pay anymore than the minimum payment.

Amount of Time Credit Has Been In Use is Fifthteen Percent of your score

The longer you have credit history, the higher the score as long as the credit you have has been in great standings.  This means that older people that have always had good credit will probably have higher FICO scores than someone who is younger with good credit, but young people can still have a great credit score.
important to look at how long have you had an account and the length of time it has been in the credit report.  The average age of your accounts are taken into considerations when figuring your FICO score.  You must also use the accounts that you have.  If it has been long time since you have used an account, it may not hold much of a score.  Using the accounts you have will help your score.

Inquiries are ten percent of your

It is easier to obtain credit these days via mail, internet and many other ways.  Each time you let someone run your credit and you get an inquiry, and it can hurt your credit score.  Mortgage and auto loans are treated differently for example auto loans made within 14 days are counted as one There are no good inquiries.  Every time you fill out a credit application, you get one or more inquiries.  A lot of inquiries look bad.  Almost any inquiry is not good, there are neutral ones that don’t hurt your score.Pre-approval inquiries are when a potential lender has looked at your credit to determine whether they want to offer you a credit.  These are not factored in to your score, but once you fill out an application with the lender, it will show up to be a bad inquiry that does hurt your score.

Periodic Review inquiries are when lenders periodically review your credit to see if there are any major changes.  If they see a major change in your score they may close your account.  These are also not supposed to be computed into your FICO score. Inquiries can show a banker how often you are trying to open up new accounts and how recent those attempts were.
Primary consideration is given to the following:

• Number of inquiries in last 6 months
• Number of trade lines opened in the last year
• Number of months since most recent inquiry

How inquiries are computed is somewhat complex and they should be avoided if possible. 

Types of Credit Experience is 10% of your score

It’s good to have a diverse mix of accounts.  Having payment accounts, retail accounts, credit cards and a mortgage is good.  Since this is only worth 10% of your score, it is not a big factor but can help.  Do not go out a try to open different kinds of accounts because a bad mix may hurt you and lower your score.

Do you have questions about raising your Credit Score?

Credit Card Debt Can Be Intense – Seek the Help of a Certified Credit Counselor

Even though right now credit card debt is the number one type of debt that Americans have it continues to swell to a greater extent each ensuing year. With the tough economic times going on right now people are using credit cards for what they normally wouldn’t, like groceries and gas. Whenever you do this, you are paying interest on things that you need for your day-to-day living, which makes you end up paying more for these items than you would if you could just manage to use cash and save your credit cards for emergency purchases. Whenever we use a charge card, we intend to pay more than the minimum payment, but it is often difficult and the minimum payment is often what we make over a period of years. The end result of this could be years of payments towards a simple tank of gas or a weeks worth of food.

Credit counseling is a form of debt management that allows you to meet with a trained and often certified debt specialists with information about all areas of debt management include debt consolidation and debt negotiation, who can take a look at your current credit card debt situation and advise you on the path through your credit card debt and to a brighter, more stress-free financial future.

Before you journey out to find a credit counselor, take the time to put together a list of all your credit card accounts with the following information included for each: creditor, creditor contact information, current balance, monthly payments and interest rate. This is just the simple and basic information about the account that will help the counselor in the process of setting up a plan to rid you of that debt. For this article, we will cover the two main forms of credit counseling and the other ideas surrounding it. Debt negotiation and debt consolidation are the two included.

Debt consolidation is the form of debt management that allows you to request a loan that will be used to pay off all other, including credit card, accounts leaving you with only one loan with one monthly payment and one interest rate. Many times this can bring instantaneous relief from all of the harassments from debt collectors. It can also bring your relief through lower monthly payment and a smaller rate of interest. A debt consolidation loan is like any other loan and that you have to apply for it and whether you can get it secured or unsecured will depend on the borrowing power that you have.

Debt negotiation on the other hand is a form of debt management that allows you or someone working for you to get a hold of your creditors and try to negotiate with them for either lower payments and interest rates or to come up with an agreed upon amount to pay off the balance in full. Many people who are in debt might be intimidated by this process, but with the help of a skilled credit counselor often times it can be successfully negotiated.

Credit counselors do more than just offer debt elimination services, they also work at helping you manage your finances better, like putting together a smart pay off plan, a plan for the better, and that they try to help you work on a budget that you can live by and stick to. When considering the options of credit counseling know that they can help you find the best way out from under credit card debt and help you avoid getting into the same situation in the future. You might be in debt now, but it doesn’t have to be as bad as you think it is. If you get the right credit counselor and service behind you, it can be a very supportive process that can be very effective in helping you.

Read about non profit credit consolidation