credit counseling

Be Careful Of Credit Scams

May 22, 2015 by illinois

Nowadays we hear of credit scams on a regular basis. Victims of these credit scams are often left to try and sort it all out, which could be costly in both time and money. We will look at the more popular credit scams so that people may be better equipped to avoid or identify them.

Common Credit Scams

Repairing Your Credit

You will find many adverts in newspapers that tell you that they can clear your name of bad credit so that you will no longer be blacklisted. This comes at a fee, of course. So you end up paying the money over in the hopes of a simple solution and these scammers run off with your money never to be seen again. Nobody can alter your credit file and simply wipe away your bad credit record. The only way to do this is to pay off the debt that put you there in the first place. Should you not be able to pay a lump sum to cover your entire debt, you can contact debt rescue companies if there are multiple bad debt scenarios or simply contact the company who you owe the money to and ask to setup a payment plan.

Credit Insurance

Credit and loan companies offer credit insurance to clients to cover their loan in the event that they cannot pay it off as expected. This could be due to unemployment, death, health issues or disabilities.

There exist other companies who will offer clients credit insurance at reduced premiums than what you would typically get from your common loan and credit companies. This is a scam – you pay these premiums over to them and all seems fine but when you suddenly cannot pay off your loan due to unemployment or disability, these companies cannot provide you with the insurance cover that you were promised and you are then stuck with the debt.

To avoid this credit scam it is incredibly important to do your homework on the credit/loan company, and when it comes to signing the credit agreement, it should be optional to include insurance and there should be a policy in place in the event you wish to cancel the insurance.

File Segregation

File segregation is a credit scam where companies offer vulnerable and/or desperate people with a bad credit history a new identity so that they can take out a new line of credit. This is done by giving them a new Employee Identification Number and a new Social Security Number. You are then told to use these new numbers when you fill out a credit application. What people fail to realize is that this is actually considered a felony and can land them in a whole lot of trouble with the law.

By declaring bankruptcy you will have trouble obtaining loans for the next 10 years because it will remain on your credit history. However these scammers make it seem entirely impossible for you to get a loan and thus they draw you towards using a new social security number and buying into their scam. You can obtain loans during your bankruptcy period, it may be difficult but different companies have different credit criteria and you may get a loan with a higher interest rate.

Identity Theft

Stealing your identity is done by obtaining your social security number and/or credit card details. People then apply for things such as credit cards and loans with your name and details and they may also buy things using this information. People only realize their identity has been stolen when they start getting called by credit and loan companies because ‘they’ have defaulted on their loans. In order to avoid this it is important to protect all of your sensitive information. Some precautions would be to request you credit report yearly, which is free to see that you don’t have some obscure marks against your name. Another thing to do would be to ensure that all paperwork, which contains sensitive information, is shredded or torn in to small pieces before being thrown away. If you identity has been stolen go to the Federal Trade Commission website for further instructions on how to proceed.

Lottery or Competition Scams

This credit scam is one I am sure many have experienced. You usually receive a text message or an email saying that you have won the lottery or some competition. You are usually prompted to pay a small fee using your credit card to claim your prize. This is where your credit card details are stolen as well as the money and you never see the supposed money you won. Legitimate competitions and lotteries will never ask you to pay a fee in order to claim your winnings.

Be Prepared And Alert

This list is but a few of the credit scams that exist out there today. One should always be alert and always question things that seem too good to be true. Research things thoroughly before you do anything.

It’s Time to Dump Your Credit Card

February 3, 2015 by illinois

You might have been using the same credit card for years now while thinking you’re getting a great deal the entire time. You don’t pay those junk letters and advertisements for new credit cards any mind because you’ve got it so good with your current provider, right? You might think you’re right, but it might also be time to dump your credit card. There’s most likely some weaknesses in the structure your current card provider has built and you could be missing out where you don’t have to. The credit card industry is running over with competition and offers that exist to try and undercut the next company’s business, so you can believe there’s always a new product or service out there that you could be taking advantage of. Are you sure there’s got to be better rewards or interest rates out there for you? Just dump your credit card this year and start searching for some of the other options out there for you!

Help over the Phone Is Lacking

Have you ever ran into issues with your bill that you needed to have rectified over the phone only to find no help at all? The customer service department is there to help each customer in some way or another. If you find that your company doesn’t seem to have much concern for your issues, you might want to dump your credit card for a provider that’s more understanding and helpful. Your time and problems are important, and you should get that sense from the customer service department: regardless of what you’re calling about.

It should be very easy to find information about the credit card providers with the best customer service departments.

Those Rewards Aren’t Useful Enough

The value of a good rewards program has been driven up in recent years and the person that’s had the same credit card for ten years is almost certainly not getting the same rewards and perks as the person that just opened up a credit card account this year. Cash back rates have risen astronomically and the lists of perks you could seem to be getting longer and longer. There’s no reason that you should be missing out on upgraded rewards and you might want to dump your credit card to see what’s out there waiting for you.

In some cases, if you’ve already got one type of card with a provider you like, you might be able to switch to another, more valuable credit card in their lineup without incurring any fees or penalties: this is especially true of the clients with strong payment histories.

Your Credit Score Is Even Better Than Before

It’s no big secret that different clients are offered different rates at the time of application depending on their credit score and worthiness. As long as you keep up with your payments and you pay down at least your minimum balances or more regularly, your credit score should improve over time. If this is the case, you’ll most likely get stuck with an interest rate that’s not very fair or reasonable. If you like your credit card provider enough, you could ask them to adjust your interest rate. If they don’t want to budge, you should just dump your credit card account and start with a new provider that’s likely to be more reasonable.

You might want to apply for a new credit card before cancelling your old account. Make sure you search around well for the best rate you can get before going with the first one you find.

Your Life Is Different and You Need More

Maybe you were a less responsible person when you initially applied for your credit card. Perhaps you used to be in the habit of racking up hefty balances only to pay them off little by little, but now you strive to pay your bills off in full before they’re due. If that sounds similar to your situation, you probably could afford to pay a little more in interest to get even better rewards that you can use.

If the opposite is true for you and you’ve got a great rewards program but very high balances, you might want to consider trying to dump your credit card for a lower-interest option that doesn’t bind your finances so heavily.

You’re getting out Of the Country

Most of the credit cards on the market today charge at least three percent for any purchases made outside of the United States. It goes without saying that your balance will add up very quickly if you’re planning a trip out of the country and using your credit card the entire time. If you’ve got an older generation credit card, it might not have the smart chip in it that’s crucial for using an ATM in another country.

If it’s time to dump your credit card, there’s more than enough options out there for you to choose!

When Does Consumer Debt Counseling Make Sense?

June 28, 2013 by illinois

Like any other debt relief option, consumer debt counseling looks for the right debt and financial situation for it to work perfectly. Not only that, you also have to identify certain skills within you to see if you can last the whole program. You need to know the process and the sacrifices that you have to make in order to be smart about your decision.

Consumer debt counseling is all about hiring a third party agency to help analyze your debt and finances to find the right payment plan that will get your through your financial crisis. It involves a counselor who will work beside you and guide you until you are debt free – at least if you choose to stay until the whole program is over.

There are signs that will tell you if this type of debt relief option is enough.

A big percentage that will tell you if this is the right program lies in your ability to get past your debt situation. Can you handle the negotiations on your own? Do you have the capabilities to talk to your creditors without being intimidated? Creditors have a lot up their sleeve and if you want to propose a new payment term with them, it may not be as easy as you think. You don’t have to be super skilled but there are characteristics that you must possess. You just have to be patient, consistent with your story and honest about your financial condition. You must be able to show your sincerity in paying off what you owe but you have to be firm that you need to have it in your own terms.

Another question that you may want to ask yourself is your ability to discipline yourself and control your wrong spending habits. Having a professional assist you in mapping out the plan and guiding you it will leave no room for excuses. If you know that you cannot control your habits, it may be wiser to have someone tell you off if you are about to miss payments.

You should also consider the fees that you have to pay for the professional service. While there are consumer debt counseling agencies that offer their services for free, you don’t know where their loyalties lie. If you go for a paid service, you are sure that they will treat you as a client and will prioritize your best interests. Make sure you have enough money for this.

Finally, an important requirement in consumer debt counseling is a stable income to support your payments. What the counselor will do is to help you create a payment plan that you can afford. Although a definite result is a lower monthly payment, there is no debt reduction. Your debt is merely stretched over a longer term. That distribution made it possible to lower the monthly requirements. This will be difficult for you to keep up with if your income is not stable.

One thing that you may be happy to know is that this type of debt relief option will not harm your credit score. It will keep you from having to rebuild your score once you completely pay off what you owe.

If you agree and you have checked out all the qualifications, you can proceed to search for an agency that will provide you with consumer debt counseling services. Make sure though, that you will perform a thorough due diligence to be certain that you are putting your trust in the right company.

How To Ensure That Debt Will Not Keep Your From Growing Your Personal Wealth

June 1, 2013 by illinois

Debt ruins a lot of things in your life but one thing that you should never let it touch is your personal growth – specifically your wealth. It may be difficult to achieve that because of your limited resources. However, if you have the right tools, proper guidance and the perfect debt solution, it is not impossible.

It may seem like debt has control over your life because it restricts you in so many ways. You may feel powerless as you watch your income just pass through your hands and onto your creditors and the various expenses that you need to finance. However, you can always take back control by simply being proactive about your debt.

Here are some tips that will ensure that debt will be kept from ruining your chances to grow your personal wealth.

Get help
If you got yourself in debt, it means you are not the best person to handle your finances on your own. Given that, you may want to get professional help. It doesn’t have to be a paid help of you want to maximize your limited income for your debts. At the very least, get credit counseling. This involves a credit counselor who will help look over your debt and finances and advise you on how you can get out of it. These counselors will educate you on your debt relief options so you know the different methods that you can adapt to solve your debt problems. To be able to grow your personal wealth, you need to be able to decrease what you owe. By decreasing the negative, you get to increase the positive – usually that is how the equation goes.

Develop personal finance management skills
When you get credit counseling, one of the things that they will teach you is proper financial management. In some cases, this is automatically given while in some, you have to request for it specifically. Learn how to budget your money, live within your means and make smarter spending choices. The thing about developing these skills is they will keep you from acquiring more debt. In essence it help you grow your personal wealth because it keeps your debts from accumulating.

Save
Another way to ensure that debt will not hinder your personal wealth from increasing is by saving. This is the most effective way of making sure that you will never acquire debt again. Any emergency situation can be financed in heartbeat. Or if you lose your main source of income, having this emergency fund set up will feed your family as you look for another job. Not only that, this is a direct way of growing your wealth because it is one of the “positives” in your ledger.

Increase your income
One of the underlying factors that got you in debt is the fact that your income is not enough to support your expenses. One way to solve that is to increase your income. This will allow you to increase your debt payments and at the same time, expedite the growth of your personal wealth. You can do this by using your hobby to earn some income or you can set up a passive income business.

All of these will help you grow your personal wealth despite your debt. It doesn’t have to be an immediate increase – as long as it is a continuous gradual growth.

How Proper Financial Management Skills Can Get You Out Of Debt

April 25, 2013 by illinois

What people fail to realize is that debt relief is not enough to get you out of debt. You need to understand that any program will have to be partnered with proper financial management skills. Knowing and implementing these skills will also help you develop the habits that will keep you from growing your debt and stay out of any debt situation in the first place.

Probably your best bet to learn these financial management skills is to go through credit counseling. This type of debt relief program includes debt education that hopes to help individuals learn how they can avoid the mistakes that they made in the past. These are the mistakes that led them to the debt situation that they are current in. The best credit counseling agency will teach their clients the following:

First is how to make a budget. If you think about it, financial management is all about staying on top of your finances. You can do this by creating a budget. It will show your income and a detailed plan of where every money will go to. By plotting your expenses on this plan, you will be able to make sure that your limited resources will go to your priority expenses and not on impulsive buying.

It is important for you to define what should be included in your priority list. We sometimes get into a lot of trouble because we always make excuses regarding unnecessary purchases. We make a lot of flawed reasoning so we can justify spending for our wants. You need to discipline yourself so you will only prioritize your needs from now on.

You want to do this so that you can free up more of your income for your debt payments. Or if not, you can use it to build up your reserve fund – which is another skill that you have to develop.

Saving is not just your security net. It also keeps you from incurring more debt. When there is an emergency, you do not have to use your credit card or resort to borrowing from someone else just so you have the money to tide you over a crisis. You can simply pull out from the amount that you had been saving up for these types of situations.

Another habit that you have to develop is making smarter spending choices. As mentioned, what keeps us in debt are the excuses that we make to justify unnecessary purchases. Think twice before every purchase and make it a habit to stick to your budget. If there is a single doubt in your mind that a purchase is really necessary, put off buying it. While you wait, you can save up for it instead of going out of your current budget just so you can afford that particular expense. Try not to put yourself in a huge credit card debt mess if you do not have to.

All of these proper financial management skills that you will learn from credit counseling will help you grow your disposable funds so you can get out of debt faster. The best part is, you get to learn the right habits that will keep you debt free for a long time. It will lead to a whole lot of new habits actually. Just remember that debt really requires you to make certain sacrifices. You have to be ready to take them because the rewards of being debt free is so much greater than what you will have to give up.

Choose The Right Consolidation Method: Loans or Debt Management

April 5, 2013 by illinois

Consolidating your debt is a great way to get out of debt without putting too much negative effect on your credit score. In fact, people think about this method long before they research on the different debt solutions that they can opt for.

Sometimes, people only need to organize their debts to make good progress in paying it off. Having more than one debt can get to be confusing to the point that you start missing out on payments. Good news is, there are two types of consolidation methods that you can choose from. Each of them cater to a specific financial situation.

Both of them will allow you to make single monthly payments. Not only that, the goal of both options is to make your contributions smaller. However, you need to understand that there will be no debt reduction for any for them. Despite the lower monthly dues, you will still end up paying for the complete amount that you owe. Because of that, a steady and stable income is an important requirement. If you know that your finances cannot afford this and you need a bigger reduction on your debt as a whole, choose another debt relief option.

To discuss their differences, let us begin with debt consolidation loans. This debt solution involves getting a significant loan amount that is enough to pay for your other debts. When you have paid off your other debts, you can concentrate on this one loan payment every month. Since a typical loan is spread out over a couple of years, you can expect that your monthly payments will be smaller compared to your previous arrangement. Another thing that can help is the type of loan that you will get. You need to target a low interest loan by having a good credit score or a collateral. Both of these will make you a low risk borrower – a qualification that will prompt your lender to give you a low interest rate.

But if you do not have a good credit score or a collateral, you can opt for the next debt consolidation type – debt management. This debt solution involves enrolling with a debt management company. They will assign a credit counselor to help with your debt troubles. They will use their expertise to analyze your finances and come up with a debt management plan that will serve as your guide. You need to provide them with accurate financial details to make sure that you will come up with a payment plan that you can afford. Once this plan is completed, the debt counselor will show it to your creditors to negotiate for a lower monthly contribution. This can be done by stretching your current balance over a longer payment term and negotiating for a lower interest rate. The former is usually approved but the latter request will depend on your creditor’s good graces. Once approved, you will send a single payment to the debt counselor who will take charge of distributing your payment to the different creditors on your debt management plan.

In choosing between the two, you have to identify the qualifications and your specific financial capability. If you will choose debt consolidation loans, you have to exert more control because you will take care of your own payments and you will monitor your own progress. In debt management, you get the assistance of a debt counselor who will remind you of your payment obligations. Of course, you need to pay the service fee but that is never over $50 a month.

The key to stay out of debt, however, is applying proper financial management practices. Most debt management companies have these to offer so your chances of learning the ropes to maintain a debt free life is more likely to happen with this option. But if you have the patience to research and learn on your own, you can save on the service fee every month and just opt for debt consolidation loans.

What Is In A Debt Management Plan

March 28, 2013 by illinois

A debt management plan is one of the tools that you can use in your debt relief efforts. However, unlike a budget plan, this is exclusive to the debt management program.

Any project or endeavour can be best achieved if you have a guide to help you every step of the way. It helps you put things in perspective. It gives you directions especially during confusing times. It also reminds you of how far you’ve come since you started and how long you have to work before you reach your intended goals. All of this and more can be enjoyed when you create the right debt management plan or DMP.

Debt management programs are usually graced with the presence of a debt counselor. They are there to help you analyze your financial standing so that you can create a realistic DMP. You can expect them to take the lead as to what component should be included in this plan. But for the sake of knowing, let us discuss the various details included in a debt management plan.

First of all, it contains the details of your debts. Of course, we only mean the debts that can be enrolled in a debt management program. These include your credit card debts, medical bills, personal loans and other unsecured debts.

You need to list all these debts, their respective creditors, the current balance, the minimum payments, monthly due date and the interest rate. There may be other details that will be specified by the counselor but these are usually the salient debt details.

Once you have all these details, you will divide it based on your preferred payment term. For instance, your $10,000 debt can be stretched over 5 years or your $2,000 debt can be stretched over 2 years. That depends on your financial capabilities. The only limitation is you cannot go over 5 years. This is done to arrive at a lower monthly payment because you have stretched it over a longer payment period.

To know your financial capabilities, you need to analyze your finances to see how much you can afford to pay for each debt. The disposable income refers to what is left of your income when the basic expenses have been paid off. You need to maximize it by lowering your expenses or growing your income.

It is advised that you put aside a sum of money for your savings. It is probably best not to tell this to your counselor as they may demand that you put it into your debt payments. Although some may advise you to set aside an amount on your reserve anyway – which is a sign of a good debt management company. It shows that they are concerned about your overall financial health and not just your debts.

When you have completed all the details, you will see a lower monthly payment and the maturity date of your new payment term. This is what the counselor will show your creditors. They will negotiate with them to accept the lower monthly amount – with the condition that you will not miss out on payments. This is why you should consider the details of the DMP carefully to make sure that you can really afford them.

Once approved, you will send a single payment towards your counselor who will distribute it to your respective creditors. While your accounts are enrolled in a debt management program, you cannot use them so the chances of you incurring more debts will be kept from happening.

Advantages Of Hiring A Debt Counselor

March 18, 2013 by illinois

Some debtors think that hiring a debt professional to help with debt relief is a waste of money. Instead of paying the service fee, why not just put that in your reserve fund and work on your debts alone? A debt counselor usually charges $40-$50 a month. If you think that is a high price to pay, it helps to think about what a professional can do for you.

First of all, you need the financial expertise that they can give you. If not for the advice on how to get out of debt, you can benefit from their financial management skills. You should realize that if you are in debt, that means there is something wrong with how you managed your money. More than getting out of debt, you need to learn how you can stay out of it and this is what a debt professional can help you accomplish. The very first thing that they will do is to analyze your finances. You can listen carefully and ask how they came about the proposed solution to your problems. Talk about what got you into debt and what you can do so that you are never placed in the same situation again. They will also assist you in creating plans such as a debt management plan and a budget plan. More importantly, they will teach you how to make these plans work.

Another advantage of a debt counselor is their negotiating skills. One of the goals of debt management is to lower your monthly payments. To accomplish that, they will lengthen your payment period and if you are lucky, they may even get your creditor to agree to a lower interest rate. Most of the time, these companies are funded by creditors so the chances of them hearing out your case is more likely. And before you react about their loyalties, the creditors fund these agencies because they provide a solution that will help you pay off your debts without reducing it. They will help you make your monthly dues lower than the current so you can see that it is a win-win situation.

If you got an agency that had been practicing for a long time, you can benefit from their reputation. A long tenure in the industry means they have established a working relationship is practically all creditors or collectors. That would make them more likely to get you a good negotiation than if you handled things on your own.

Probably the best advantage to hiring a debt counselor is you get to be protected from harassing calls that are forcing you to pay your dues. Once you enrol your debts with them, they will take over all creditor communications immediately. Also, their presence will indicate that you have plans to pay off your dues. That will make your creditors back off.

All of these benefits seem a lot compared to the $50 a month that will be requested from you.

Of course, debt freedom will still depend on your ability to commit to the program. You may have the best debt counselor beside you but if you are still incurring debts, you will never solve your problems. Be sure to practice the right spending habits while you are paying off your debts.

Debt Consolidation: Truth VS Fiction

March 10, 2013 by illinois

Debt consolidation, while clearly being an effective debt solution is plagued by a lot of myths. These misconceptions often lead to the failure of the debtor to get out of debt completely and permanently.

Before you work on this debt relief option, you may have to separate the truth from the fiction. It pays to know what this solution can really do for your credit problems so as not to make the wrong expectations. That could lead to disappointments and abandonment of the program if one is not careful.

There are two types of debt consolidation: debt consolidation loans and credit counseling.

Debt consolidation loans, require the debtor to take out a huge loan that is enough to cover their other debts. You need to look for a loan that has a lower interest rate than your current APR (annual percentage rate). Not only that, the ideal loan should require lower monthly payments compared to what you are paying for at the moment. Here are the popular myths surrounding this type of debt consolidation.

Fiction: You always need a collateral when taking out a loan.
Truth: While it can help you get lower interest rates, this is not always ideal. In fact, it may be viewed by financial experts to be unwise if you put your home (or any valuable asset) on the line for your debt.

Fiction: A good credit score is a must.
Truth: Like the previous misconception, it is not true that a credit score is always needed. Although it can also help lower your interest rates it is not a compulsory requirement for you to avail of this type of debt solution.

Fiction: Using a loan is the first option to get out of debt.
Truth: The whole concept of debt consolidation loans is similar to digging a hole to cover an existing one. It may be effective but you are not really solving the problem. It is like you are creating a new problem to get rid of another. There is no doubt that it can be effective but you have to make the commitment to finish what you started and stick to the new payment plan of your new loan.

In credit counseling and debt management, you will also encounter a couple of myths that fool other people into making false expectations about its results. This basically involves hiring a third party company to help you get out of debt. A credit counselor will help you analyze your finances and manage your debts by allowing you to make single payments while they take care of distributing it to your creditors. They will negotiate with the creditors for a longer payment period that will allow you to make lower monthly payments. To avoid being part of the statistics that failed in this debt solution, you need to get your expectations right. Here are the misconceptions that you need to avoid:

Fiction: Debt counselors can help negotiate for a reduction on your debts.
Truth: Although you will be making lower monthly payments, you still end up paying for your total debt balance. Debt settlement is the debt relief program that offers debt reduction. If this is what you need, then credit counseling or debt management is not the right program for you.

Fiction: Credit counseling companies charge differently and offer varying programs.
Truth: The government is closely monitoring debt relief companies so you can expect that there are rules to make charges and processes standard. If you think that one company is not helping you, consider if you are using the right program altogether. Even if you shift companies, it may produce the same results. There are other debt relief programs that you can avail so research on your different options first.