Working with a Credit Counselor

A lot of people feel embarrassed at the idea of going to a credit counselor. But think of it as a chance to get a mini college course about managing your money. Making Your Family Finances a Priority One famous money management advisor observed that most of us spend more time planning our family vacation than we do our family finances to try to come up with the money to pay for the vacation. The first step to success will be to pay more attention to money each day. We brush our teeth and get washed and dressed as part of our daily routines, often without even thinking about it. However, we should take a few minutes to check the health of our finances each day too. This can include going through the mail and reading through credit card statements, sitting down to pay bills, and so on. Any good...
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What Is Consumer Credit Counseling, and How Can It Help Me?

Consumer credit counseling, as the name suggests, offers counseling to consumers in relation to how they use credit. Credit Defined Credit may sound like only credit cards, but the truth is that many people use various different types of credit throughout their lives. They might start with a credit card and student loans. Then they lease a car. They might get a mortgage on a home. Then they take out purchasing agreements for great TVs and furniture for their home. They love to shop at certain stores, so they take out a store credit card and use it for all their purchases because they get “free” items and discounts. Good Credit, Bad Credit On the one hand, credit is good, because using credit and then paying back the money shows that you are a financially responsible person. All of this activity is reflected in your credit score. A good credit...
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What Is a Credit Score, and How Is It Calculated?

As a credit counselor will tell you, your credit score is like a financial ID number. The lower your score, the less desirable a customer you are, and the worse credit terms you will get every time you wish to get credit from a bank, credit card company, and so on. By contrast, the higher your score, the more desirable a customer you are, and the better credit terms you will get every time you wish to get credit. This can save you thousands if not millions of dollars during your lifetime, because you will be offered the lowest interest rates on things like your mortgage, car loans and more. While there are some aspects of credit score calculations that are kept secret, we can guess at five of the main components used by the Fair Isaac Corporation to arrive at your FICO score. You can find their website at...
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Understanding Your Credit Report

Looking at your credit report will usually be a part of credit counseling and getting back on the right track financially. A credit report reflects your consumer credit history. It used to just be used to determine creditworthiness, but now it is also being used by insurance companies to determine premiums, and even prospective employers to determine if you are the right candidate for the job. Since credit reports are now so important, you should get a copy of your credit report and take the time to learn how to read it. And if you find any discrepancies, you should challenge them right away. Getting a Copy of Your Credit Report You actually have three credit reports, one from each of the three nationwide credit reporting agencies in the US. They are Experian, TransUnion and Equifax. Order them online from AnnualCreditReport.com, which is the only authorized website for free credit...
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Tips on How to Get Control of Your Credit

One of the main reasons people get in too deep with their credit is that they don’t manage it effectively. Here are some of the best ways to start taking control. 1. Automate All Payments If Possible One way to avoid late payments or missed ones is to automate them. If you are not already using online bill pay and making electronic payments to your creditors, go online now and start setting them up. 2. Go Paperless If You Can Paperless statements are convenient and easy to store. Save them as PDFs in a Finances folder on your computer for easy reference. Create one folder per bank account or credit card to keep yourself organized, and download each statement into the correct folder. Also remember that you will need to keep all your financial records for at least seven years for tax purposes. You can also print out a copy...
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Strategies for Paying Down Your Credit Card Debt

There are two main strategies for paying down credit card debt. Using either one can help you go for your goals of freeing yourself from interest payments so you will have more financial freedom. The strategies are: 1. Pay the debt with the highest interest rate and highest balance first 2. Pay the debt with the highest interest rate and smallest balance first Let’s look at the pros and cons of each strategy. 1. Start with the Highest Interest Card with the Highest Balance With this strategy, you pay the minimum payment on all your other cards and apply all the other money you have available towards this one. You will save on interest and once you have paid off this high balance, you will have a better credit-to-debt ratio and improve your credit score. When you have paid off the first high interest, high balance card, move on to...
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Is Credit Counseling the Same as Debt Management?

A lot of people who get into trouble with credit card debt become tempted by offers of debt management, debt negotiation and debt consolidation. It is important to note that credit counseling and debt management are NOT the same. There are companies that offer both; however, most debt management companies will charge for their services, as compared with non-profit and free credit counseling services. In some cases, debt management companies will not do what they promise. They might not be able to negotiate good terms, or they might send in payments late, leaving you worse off than before. There is a role for debt management in helping people with their finances, but it is really a case of buyer beware and researching several companies to compare offerings and make sure you are clear about their commitments and yours. What Is Credit Counseling? Credit counseling is a financial service designed to...
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How to Choose a Credit Counseling Service

Choosing the right credit counseling service could be one of the most important decisions you ever make when it comes to your finances. You should look for a company that puts your financial education and goals first. Even non-profit companies can be all about the money if you are not careful. Not all services are created equal. Here are some questions to ask that should help you find the right service. What services do you offer? In addition to various kinds of credit counseling (that is, education about consumer credit, budgeting and paying down debt), some services will also offer debt management or even debt settlement services. Debt management will allow you to safely pay back your credit card debt at reduced interest rates. Debt settlement might involve taking out a lump sum loan with the goal of paying off all debt and then just paying back the loan, one...
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Different Types of Credit Counseling: Which One Is Right for You?

There are a number of different areas of credit counseling that might be right for you. It is a question of how much debt you have, and the nature of that debt. Common debts include: * Credit card/store card debt * Mortgage/housing-related debt * Student loan debt Some consumer credit counseling services may offer debt management and/or debt settlement. Some will also offer bankruptcy counseling. Before You Choose a Service Before you choose a service, gather together all relevant financial paperwork for three to six months if you have it available. If not, start saving all finance-related paperwork going forward. Make copies of your pay stubs for rent or mortgage bills, utilities and so on. The counselor will need all of this information in order to help you come up with a plan to pay down debt, and stay out of debt. They will also need this if they offer...
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Credit Counseling: Learning the Tricks of the Credit Card Trade

Credit cards seem like such an easy way to pay for everything – online, over the phone, and in person. You don’t have to fiddle for cash; all you have to do is swipe or insert the card so the machine can read the chip. In most cases, you don’t even have to sign for your purchases. Some credit cards are simply tap and go. All of this is amazingly convenient, but it is also very easy to lose track of what you are spending, and end up maxed out on one or more of your cards. Rewards for Shopping In addition to the convenience of a credit card, companies often offer special rewards and incentives for using their card. Things like air miles, cash back, or points in their gift mall may seem like a good deal, until you consider that studies have shown that people who use reward...
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