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Reduce Debt With Debt Consolidation Settlement
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Reduce Debt With Debt Consolidation Settlement
Staff - Mortgage Lenders Plus.com
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Now that interest rates are rising debt consolidation is becoming more common. Many potential home buyers are taking out one loan to pay off several others. It is often done to secure a fixed interest rate loan or for convenience.
If you are planning to buy a house it's a good idea to closely examine your personal finances. By reducing your debt you can improve your credit rating and increase your chances of being approved for the loan amount you need.
Evaluate your credit standing by looking at your credit reports. Experian, Trans Union, and Equifax all maintain records of your financial history. They provide your credit reports to creditors as requested. It's a good idea to periodically request a copy of your credit report so that you can see what the creditors see and make sure there are no discrepancies or cases of fraud. You can request a credit report directly from the major credit bureaus online: Equifax, Experian and Trans Union.
How does debt consolidation work?
Numerous companies advertise "credit counseling" and "debt consolidation" services. These companies examine your expenses and decide what you can afford to pay (TOTAL, per month toward your debts.) In order to reduce your “minimum” payments and lower your interest rates these companies negotiate with all your creditors (this only works for UNSECURED debt, not car loans and mortgages). Many of these companies claim they can reduce interest rates significantly. Some even claim they can get you zero percent interest. By reducing your interest rate you have more money available to pay per month towards the principal, which makes good sense. You can do the same thing these companies offer if you're a good negotiator.
Many debt consolidators claim things they cannot deliver. For example:
- "We'll repair your credit history." This is not true. For good or bad your credit history is yours. It is what it is.
- "We'll give you a new 'credit identity." This is illegal. However, it can be done. What they do is provide you with a false Social Security number, which is fraudulent.
It is not possible to legally remove accurate information from a credit report. You can remove any wrong information listed in your file. If you find something on your credit report that is inaccurate or incomplete, simply ask the credit-reporting agency for a dispute form. Then submit your dispute in writing with copies of the disputed charges and any other necessary information.
What other ways are there to get out of debt?
Hire an accountant or an attorney, who can negotiate with your creditors for a reduced payment. This is also known as debt settlement. An accountant or attorney may make arrangements for a payment to be made at a reduced rate $.30 cents on the dollar instead of the full amount due.
Credit managers view debt settlement in a positive light as it shows good integrity and honoring one's obligation.
Resources for managing your finances:
Utilize a credit monitoring service. This kind of service guards against identity theft by keeping close tabs on your credit card. At this website they have a good comparison chart http://www.fightidentitytheft.com/credit- monitoring.html. For example, Equifax offers an identify theft insurance up to $20,000 and provides email security alerts.
Here are some other helpful links:
Ten Simple Steps To Minimize Your Risk of Identity Theft
American Association of Credit and Collection Professionals
National Foundation for Consumer Credit
"Take responsibility for your finances or take orders all your life,” as Robert T. Kiyosaki, author of Rich Dad, Poor Dad says. His words are important to take to heart as you manage your finances to prepare for a home loan and for life. Remember, what his adage, “You're either a master of money or a slave to it."
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