Top Three Misconceptions About Credit Scores

When the credit score was developed by lenders decades ago, it was never intended for consumers’ eyes. In fact, the algorithms used by the Fair Isaac Corporation (more commonly known as FICO) and individual lenders and credit-related agencies are proprietary, developed using complicated statistical analyses geared toward determining an individual’s relative risk. Using the credit score provides lenders with a quick overview of how likely it is that an individual borrower will default on a loan; based on that overview, lenders will determine the interest rate they’re willing to offer and even if they’re unwilling to offer any loan at all.

Despite the fact that credit scores were designed for the lending industry, over time consumers have become very aware of the important role the scores can play in determining the loan offers they receive. However, most men and women still remain unclear of what credit scores are and how they can affect their lives. Here are the three most common misconceptions about credit scores:

1. FICO is the only credit score around.

FICO may be the most widely publicized and arguably the most widely used, but as noted earlier, there are lots of credit scores and some lenders have their own proprietary scoring system developed for their unique lending profile and needs. As a result, your score can vary lender by lender. Since you can’t predict which scores will be used when you apply for a loan, the best strategy to pursue is one of responsible credit management. Use a credit counseling agency to help establish the healthy financial habits that can ensure your credit remains as healthy as possible.

2. It takes years for credit scores to improve.

In fact, credit scores can change pretty rapidly, sometimes by 20 or more points in just two or three months based on your credit habits. Most payment information is updated every 30 days and applying for new credit will usually be recorded almost immediately. Credit counseling or debt management from Credit Guard can help you understand how to monitor your credit report and identify the changes that will help improve your credit history now and over time.

3. The best way to build credit is with more credit cards.

The best credit scores are built with a combination of different types of credit, including cards, your mortgage, your car loan and more. Having a diversity of credit types shows potential lenders you can handle a wide variety of terms and loan structures and that’s generally viewed more favorably than a history composed solely of credit cards. Managing lots of different loans – especially unsecured loans like credit cards and personal loans – can be difficult and increases the risk of missing or late payments. Credit counseling experts can help develop a once-a-month consolidated payment plan to make the payment process easier.

Credit scores play an important role in ensuring the credit and loan market remains competitive. It’s up to the consumer to ensure they adopt the healthy credit management practices to keep their credit scores as high as possible. Debt management programs are a great way to be proactive about achieving and maintaining healthy scores.

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Overcoming Debt with Credit Counseling

When you are facing debts that seem difficult to manage, it might be time to seek credit counseling services. The best way to handle your debts is to take action as soon as you realize that the interest rates and fees are making it hard to keep up.

Help From Consolidators:

Reaching out for help from professional consolidators will give you the breathing room you need to start focusing on your debts. A consolidator will negotiate with your creditors to bring down your interest payments.

When your interest rates are lower, the amount you are paying each month on unsecured debts like credit cards will become much more manageable. It will make it easier to keep up with your debts so that you are able to make a realistic plan to start getting your financial situation under control.

Organizing With a Credit Counselor:

After our professional consolidators help reduce your interest rates so that your monthly payments are manageable, you are able to talk to credit counselors. During credit counseling, you will learn the organizational and money management skills you need to get out of debt and keep your financial situation under control in the future.

Credit counselors are professionals in the field of finance who can help you identify areas where you can improve and the areas where you are doing well. You will learn how to eliminate unnecessary and impulsive spending while creating a realistic budget that you can easily maintain.

A credit counselor will provide you with the educational resources and information you need to manage your finances in the future as well as managing the current situation. By working with a credit counselor, you can overcome your debt and take measures to ensure that the same situation does not arise in the future.

When debt becomes hard to manage, getting a little help from professional consolidators and counselors will allow you to get back on track. You can eliminate your debts and learn new skills that will allow you to avoid the same situation later. With the right educational resources and assistance, you will find relief from debts.

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Credit Card Debt Help for Savings Problems

individual in credit card debt

Individuals from all backgrounds can accumulate credit card debt.  Households across all demographics can accumulate credit card debt when financial emergencies or changes occur.  Research shows that the rate of debt is fairly consistent across all income levels.  The research explores the debt-to-savings ratio across the various income levels.

In 2011, 22 percent of individuals who earned $75K had more credit card debt than savings.   Among individuals earning between $50K and $74.9K, 27 percent of the group had more debt than savings in that same year.  In the group earning less than $30K, 23 percent of the population had more debt than savings.  In 2013, the trends were similar.  In 2013, 23 percent of the group earning $75K had a higher amount of debt than funds saved.  This year, 25 percent of the $50K-75K group had more credit card debt than actual savings.  In the group earning under $30k, 23 percent of the individuals had more debt than savings.

The inability to grow the savings in the midst of high credit card debt is a problem that many people encounter.  Divorce, recent graduation, unemployment, a growing family or any other change in lifestyle poses challenges for those who want to be able to build their credit and savings at the same time.  The research shows just how difficult it is for individuals across all income levels to save when they have credit card debt.

Many people seek credit card debt help in order to get their credit in order.  The debt counseling achieves several objectives for the person who wants to lower debt and build savings.  Credit counselors can develop a strategy that accomplishes multiple personal finance objectives.  The experienced debt counselors can work within any type of budget to help the person meet or exceed their goals as they work through a debt consolidation program.  The typical debt consolidation coaching plan may include the following:

  • A budget that is comfortable for the individual
  • A long-term savings plans
  • A credit card debt help repayment strategy where all creditors are paid down

Although the debt-to-savings ratio has remained fairly consistent for years, the average person will have a hard time building credit and savings with stagnant wages, inflation and a troubled economy.  Working with a debt counseling agency can help people achieve all of their personal finance goals.

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3 Factors to Consider When Choosing the Best Debt Consolidation Plan

The best debt consolidation plan depends on your individual situation. Some consumers simply wait for their next tax return and pay off their entire debt, or at least a huge chunk of it. This may not be reality for you. If you aren’t able to do this, then what are the best debt consolidation services available? Here are the three factors you should look for when choosing a consolidation service.

Fees

Some services charge fees for various services. Others may pull you in with a low introductory fee but tack on additional fees when you require certain services. Non profits may just require a donation of your choice. Make sure you understand what types of fees the service charges and exactly how much you will owe at the end.

Specific Plan Features

Some consolidation services will offer additional help throughout your time with them. For instance, they may assign you a personal debt counselor to help you track your spending and budget accordingly. Places like www.creditguard.org/debt-consolidation/ may offer several different options for consolidation, versus only one option through another company. Remember that some of the additional features available will also incur an extra fee, while some companies offer the entire plan for just one encompassing fee.

Customer Service

customer service from service company

Debt is a very personal problem. Some people feel guilty about being in so much debt and are ashamed they have to seek help. Some people may even feel angry that events in their lives forced them to take on more debt than they wanted to. The service you choose should have supportive staff that is excellent at customer service. They should never make you feel dumb or ashamed at being in debt. They should maintain friendliness and professionalism at all times.

The best debt consolidation plan is the one that you can fit easily into your life. This means that you like the people you are working with and they offer you practical solutions that are applicable to your specific situation. There are plenty of plans to choose from out there so make sure you choose one that you feel good about.

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How Is Non Profit Credit Counseling Different from Other Forms of Debt Relief?

Non profit debt counseling is one of the most popular forms of debt relief available.  Consumers like having the opportunity to pay off their debts at an accelerated rate so they explore credit counseling services.  Licensed professionals advise clients on how to improve their credit scores and manage debt when they receive credit counseling through a non profit counseling program.

non profit credit counseling can help you find the way out of debt

Features of the Non Profit Counseling Program

These programs do not offer debt counseling exclusively to their clients.   Many of these counseling programs offer a variety of counseling opportunities to participants enrolled in the program.  Individuals may elect to participate in budget counseling or take financial literacy courses.  Debt counseling services offered by the non profit credit counseling program focuses on the debt and other areas of concern that may affect a person’s finances.

Inside a Non Profit Counseling Strategy

Central to the non profit counseling strategy is the negotiations process.  The licensed counselor negotiates with creditors to lower the fees and the interest rates on unsecured debts.  The late fees and other penalties assessed to the client can be eliminated in some cases.  Once the debts are negotiated with the creditors, the client and counselor work together to create a budget in order to arrive at a comfortable monthly payment.  The person can then begin repaying all of their debts without having to worry about late penalties and accruing interest.  This gives the client the opportunity to repay their debt more quickly.

Advantages of a Non Profit Counseling Program

Some credit counseling services may come with fees and other stipulations as a part of the program.  When people enter in counseling provided by a non profit credit counseling agency, there are minimal fees assessed to the client.  In the case of a debt settlement or bankruptcy, a person risks losing their personal assets as a part of the process.  With the non profit counseling agency like CreditGUARD, the person doesn’t have to worry about losing their personal assets.

Why People Choose Non Profit Counseling

People choose non profit counseling when they want to gradually improve their credit and avoid filing bankruptcy.  They often have a desire to learn more about personal finance and money management.  They know that their credit card debt can often be lowered when working with a non profit credit counseling company.

The person who wants to take charge of their financial future may look closely at credit counseling offered by a professional agency.  Every person can consolidate all of their unsecured debts into one convenient repayment plan.

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Non Profit Credit Counseling Services Pave the Way to a More Stable Financial Future

non profit credit counseling services pave the way

Being stuck in a rut of debt can leave people feeling like there is no way out.  It is important for anyone who is in over their head in debt to remember they are not alone.  Numerous people, from all different income brackets, often experience periods in their lives when they are face-to-face with more debt than they can reasonably handle.  While this can be an uncomfortable situation to be in, there is help available that can assist people in getting back on the track to financial security and stability.

Choosing a Non Profit Financial Planning Agency Leads to Financial Solutions

Non profit credit counseling services provide free or low-cost financial planning services and debt consolidation programs.  Taking advantage of debt consolidation services through a non profit financial planning company is an effective way for anyone to begin taking control over their monetary future.

When too much debt becomes an issue, many people find that their credit scores take a turn for the worse.  When credit scores begin to drop, this can affect a person’s ability to get a loan for a house, a business, or for an automobile.  Getting back on track and regaining good credit can occur with the help of a professional service that is experienced in helping people to consolidate their loans and in offering financial planning that is tailored to suit needs on a case-by-case basis.

Understanding How Debt Consolidation Works

Debt consolidation services are a main type of service provided by non profit credit counseling agencies.  Utilizing this type of service allows people to not feel hassled by continuing bill collecting calls.  The agency will take over communications with the collectors and will also work on behalf of the client to arrange lower payments and reduced interest fees on all outstanding debt that qualifies for these actions.

Free consultations are offered to individuals and families who are interested in learning more about debt consolidation services.  Contacting non profit credit counseling services can be the very step that begins the procession to lead to an improved financial future.  Many people often believe that their financial situations are beyond repair; however, with the use of professional consolidation services through a non profit company, people of all ages and backgrounds can begin looking forward to their financial futures as opposed to fearing their financial futures.

There are multiple ways a debt consolidation service can provide assistance that can generate quick results when it comes to helping a person to take control over their finances.  Offering counseling services that instruct individuals on how to best cut back on spending and how to begin planning for their futures are also services that are provided.

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How Credit Consolidation Ends Credit Card Debt Nightmares

credit consolidation can end your debt nightmarePeople begin to rely heavily on their credit cards when they are experiencing a low cash flow problem. This can happen when jobs are lost or hours at work are reduced. Sometimes, large unexpected expenses come up, and they have no choice but to place these charges on their credit cards because they do not have enough in their savings accounts to cover the cost. At the end of it all, they are faced with several credit card debts that are impossible for them to pay in full.

Is There Help for Those in Credit Card Debt?

Many professionals are out there ready to help people in the situations described above. They understand that people fall into debt out of necessity and not necessarily because they overspent frivolously. However, a one-size-fits-all approach does not apply here. These professionals have different strategies they can employ to help their clients with credit consolidation.

The Debt Management Solution

Credit consolidation is when people reduce several credit card payments to one. As it is right now, people may be paying two or more credit card bills a month that have different interest rates. Debt consolidation professionals can be instrumental in this situation by offering their expertise to negotiate with their clients’ creditors.  Once a lower payment rate is reached, debtors can pay their consolidator one manageable monthly payment and start working down their debt.

How Debt Management Works

When people hire a debt management company, their counselors will work to reduce the interest rates that their clients are paying. This will bring the monthly payments down to a more manageable amount. Then, the counselors will analyze their clients’ monthly income and expenses to determine how much money their clients can afford to apply toward the program every month. The credit accounts will be consolidated because the clients will only write one check to their counselors who will disburse the agreed upon amounts to each creditor.

The Debt Consolidation Loan

Another way that people consolidate their credit accounts is to obtain a debt consolidation loan. The most common way people do this is by applying for a home equity loan. Once they obtain this loan, they will pay their credit accounts in full. This is a poor option because it opens the window for more borrowing and can quickly lead to more debt. Generally, credit consolidation from a reputable source is a safer choice than using a loan.

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