Tag Archives: card
Credit Card Debt Management Consolidations
Credit card debt consolidation can be of two types consolidating all your debts into one debt, or taking a fresh loan to pay off all the existing debts. Technically the latter type is called debt consolidation loan but the term debt consolidation is often used to mean both methods. One should confirm before committing to either alternative and choose whatever method is more suitable to his/her situation.
Mere debt consolidation is not a loan. It is the process wherein you combine all your credit card debts into a single debt with the help of a professional debt management/repayment program of a financial institution. The representative of the program negotiates on your behalf with the credit card companies regarding your outstanding debts. The duty of the representative is to secure a lower rate of interest and reduction in penalties for late payments.
Instead of paying several separate bills every month you make only one consolidated monthly payment of a fixed amount to the debt manager as if there is only one loan. It is his duty to make the payments to the individual creditors and keep your accounts up to date. The programs will require you to stop using your cards till complete repayment of debts. With the systematic guidance of a professional debt management program you can pay off all your debts in a much shorter time than you expect. The service involves fees for securing all these benefits.
The second type of debt consolidation entails taking a fresh loan to pay off the existing loans. It is the oft resorted measure to pay off the credit card debts. A debt consolidation loan facilitates a fixed rate of interest, lower monthly installments and the convenience of servicing a single loan – instead of coordinating between many debts with different rates of interest. Credit card consolidation service providers or help centers extend the necessary assistance to get the loan.
One should be careful before going for a consolidation loan because more often than not they charge a high rate of interest and generally they are secured loans – unlike credit card debts, which are unsecured debts. A default may result in losing the property given as collateral. Choose only a loan with a competitive rate of interest.
Debt consolidation of either type does not revamp your credit rating overnight. But it can help improve your credit history and ensure a debt free future with careful planning. Also, it protects you from harassment of creditors and the humiliation of filing for bankruptcy.
How To Get A Good Credit Score
When a person goes to the bank for a loan they must be ready to present a good credit score. This is because with a good score, approval is fast. If one has a bad credit score on the other hand, their loan can get denied. Some lenders will approve the loan but only for bad credit loans. Now bad credit loans have high interest rates and at times require a security pledge. These are just plain hassles without a doubt.
So how can someone get a loan when its required, without all these hassles? and what can be done in order to avoid a bad credit history? There are a few ways in which to do so.
Paying On Time
First and foremost, pay dues on time. It doesnt matter whether they are utility bills or credit card debt. On time payments result in a good score while late ones result in a negative score. On time payments, however, are only possible when ones finances are in control. One may find it difficult to keep up with their dues if they are short of cash. Therefore budgeting and organising finances first allows someone to plan for bills once they arrive.
Make Use of Credit
Second, one must use a line of credit. Credit scoring is based on the proportions of a credit limit versus the persons outstanding balance. When someone frequently uses cash there is less room for debt. However, a credit score can become stagnant. This means credit bureaus don’t have any credit reference to score an individual. So although one should minimise credit card use, it doesn’t mean stop using it entirely, nor does it mean they must max it out.
Maxing out a credit line is one of the fastest ways to garner a negative score. One should only use their credit card wisely. Wise charges include charging big ticket items, balance transfers and low interest rate purchases.
Double Check for Discrepancies
The next great way to increase a credit score is through being vigilant regarding credit reports. Unfortunately, lenders arent always accurate in reporting to credit bureaus. Additionally, credit bureaus themselves can input errors in the report. Thats why an individual must always check his or her credit history in order to notice such disputable cases. And when they do, this can be reported to and corrected by the credit bureaus. It may seem insignificant but small corrections in a credit report can greatly impact ones credit score.
Building a good credit score is not easy. A person must be patient, diligent and wise in his finances. In time, they will see improvements in their credit score. When this happens only then can one apply for a fast cash loan and get credit cards without hassles.