Restore Your Credit Rating Through Debt Solution

Debt solution credit agencies and your credit ratings

In a credit related society such as the one we're living in today, having a good credit is very important. Whether it's purchasing a new vehicle, or requesting finance for a new home, or even applying for a conventional loan – it's your credit status and ratings that count and determine exactly how much credit's going to be made available for you. At times individuals having lesser academic qualifications or simple job profiles end up getting good credit as compared to their "educated" colleagues, simply because they've taken care of their credit ratings and done the "right" thing at the "right" time. A couple of "defaulted" payments can damage your credit ratings substantially. And that's going to affect you sometime, somewhere and someplace. That's where "debt solutions" and "debt solution programs" come in. If you're credit's taken a beating, these programs help to restore your credit status back to "normal".

It's important to know that three major reporting agencies - Equifax, Experian, and TransUnion - provide your credit information associated with your account. The Fair Credit Reporting Act, also referred to as the FCRA, makes it mandatory for these agencies to make your credit report available to you - at no cost - once in every twelve months. These free reports can be used for evaluating your credit ratings, and you can do it yourself, if it's possible to interpret your liability status and condition.

Probable causes of bad credit ratings

There are several ways by which you can "damage" your credit ratings. The following are a few pointers generally associated with a large number of bad credit ratings:

You do not pay off your debts on time, or are late in paying

Paying your monthly dues on time is important since it directly affects your account transaction history. This history in turn affects your credit ratings. "Defaulted" payments can lead to a dark blot on your credit records and affect you for a long time, since credit related history takes time to "go away" and can be eliminated only by subsequent proper payments and creditor approval.

Debt to income ratio

The ratio of your annual cash inflow and your "borrowings" can affect your credit status up to a certain extent. If you're earning $50,000/- per annum and your borrowings indicate you've a liability of $40,000/- per annum, you're status is judged to be "high risk" by credit companies, even if you're monthly payments are on time and you haven't defaulted in the past.

Distant past history of bad credit

You're past counts. At least the past related to your account and credit. If you are regular in your payments and have fulfilled your commitments, it's still possible to have a bad credit status as your "past" exhibits a bad credit status.

Too many credit cards or loans

Each debt or a loan is interpreted as a liability in terms of credit ratings. More the number of loans, the greater are you're liabilities to "redeem" your debts, and this condition works against you in the long run. Credit card debt consolidation company understand greater the liability, greater are the chances of defaulting upon the payments. Statistics and figures can work against you.

Unconventional source of income

Your source of income can be a surprising but possible cause for a bad credit rating. Ratings are programs based upon general guidelines since they cater to mass number of individuals. And these programs have certain parameters attached to them. These parameters also include your source of income. If you're doing a simple 9 to 5 or have your own proprietorship or firm, chances are this won't affect you. But if you're method of income is not included in these parameters, it is considered as "abnormal" or "not standard" and can reduce your ratings. Thus the normal credit scoring techniques make you look like a bad bet.

How to repair your credit ratings

If you are not aware about your credit ratings, it's possible to obtain the free credit reports as mentioned above. It's an activity that's often overlooked, but of great importance - your credit future is at stake. Taking necessary steps can help prevent financial pitfalls created by lack off, or inaccurate credit information. Debt solutions companies can help you restore you're credit. The company employs a team of "debt" experts who have the experience to guide you with their advice and experience. Each client is appointed one "representative" so you one-on-one conferences and representation. There are also other experts can also negotiate on your behalf with the credit card debt elimination companies and improve your credit ratings through their debt solution programs or debt settlement programs.

Types Of Debt Solutoin

Debts generally occur when your earning power reduces in comparison to your expenditures or overheads. Debt solution companies offer debt management solution which enables you to pay off your outstanding dues in a timely manner. However the process involves negotiations on your behalf with your creditors. The companies offering consumer debt solution often provide debt consolidation solution services in addition to credit card debt solutions. A few options are available to the debtors to redeem the debt and maintain a positive state of financial affairs. Debt Solutions USA offer services which might prove to work in your favor. Here a few of your options:

Debt Management Solution

This activity includes a credit counseling session where a credit expert studies and analyzes your existing finances and debts. The expert works out a budget for you which would promote further cash inflow towards your debt payment. If case of severe debts, a DMP program can greatly benefit you since it involves debt negotiation with your creditors and requesting them to lower the interest rates and cut down upon your late fees. Services offered are classified as Debt Management Program.

Solution for Debt Consolidation

This process consists of adding up or combining all your existing loans into a single loan having its own special payment terms and interest rates. All your existing loans are re-structured into a one major loan and the net payable monthly installment amount is adjusted as per your cash inflow and repaying capacity. The process offered is termed as Debt Consolidation Solution or Debt Settlement Programs.

Credit Card Debt Solutions

Settling credit card debts pose a greater challenge since people tend to use credits cards more frequently, which increases the chance of crossing your allotted credit limit. Typically a credit card solution should offer the following features:

Flexible Payment Plans

1. Adjust the monthly payment plan based upon your income and net savings.


2. An improved credit score


3. Regular payments can lead to a good account history which will help to improve your credit ratings.


4. Consolidated monthly bills


5. Pay a single monthly bill in lieu of several "smaller" bills. Tackling a single entity is much easier since it saves time and organizes your thinking process.


6. Reduced APR
   

The term annual percentage rate (APR), generally means the amount payable on the interest rate based upon your credit card for a whole year. Tax calculation is based not just upon your total cash inflow but also upon the total number of financial instruments active at any given time. The general understanding is greater the number of "borrowings", greater is the borrowed amount and the net payable tax. A single loan can reduce your APR.

Debt Management Solution

Debts and how to come out of it – A simple explanation

A debt in the financial sense can be broadly understood as the borrowing of money or some resources, services or any such entity having a certain monitory value, under specific terms and conditions, and which involves a repayment in a predefined manner over a specific duration of time. In layman's terms a debt is simply money borrowed from a person or company (lender or creditor) which has to be paid back after some time along with some addition interest amount.

The borrowers or debtors often get confused while understanding financial terms and conditions. At times simple conditions and activities are associated with phrases and syntax that is difficult to understand. For example terms such as debt solutions services tend to create an impression of a large number of individuals working in a big company where all borrowers are lined up and processed one after another like in a car manufacturing factory. Or the terms debt management solution and consumer debt solution impression of some serious financial condition where a group of service executives or agents surround you with legal attire and explain things to you on black board. Some terms like Christian debt solutions and American debt solutions tend to raise eyebrows because people belonging to other ethnicity and countries may feel singled out. Even issues related to credit cards usage are referenced as credit card debt solutions and credit debt solutions. So confusion prevails. What do things actually mean? What do they signify? The answer - a narration consisting of simple explanations without using any of these terms and fancy terminology. Please read on.

As per the understanding the borrower is supposed to pay a certain amount of money back to the person who has lent it, usually on a monthly basis. And this particular process is supposed to repeat until all borrowed money is paid up, along with some extra money. This extra money is the interest amount or the creditor's profit. The basic question you need to ask is Why should anyone give me money?, What does the person gain if he/she lends me money? and even Why lend money to people in the first place? There is a simple answer for all these questions. There are certain individuals who have extra or excess money and who want to earn more from it. So they decide to give some portion of what they have to you and earn some additional money as fees by offering you the facility. The problem is once the individual borrows money and starts paying it back, something goes wrong after some time and the monthly payment stops. This creates an unacceptable condition for the lender since his or her basic purpose of earning extra money is not solved. In fact the person stands to loose upon the actual amount lent to the borrower. This is not acceptable in an ethical sense since you are supposed to pay back what does not rightfully belong to you. The issue is - at times people simple can’t. And the creditor tries to obtain back what is rightfully his or hers. That is where debt solutions come in. These facilities create a condition where the requirement of both the borrower and the lender are satisfied up to a certain extent. Certain companies offer services which help the borrowers to reach a mid way point and pay off certain portions of the money owed to the lenders.

Services offered:

The services offered by such companies are known as debt solutions services; simply because they cater to debts and how the lender can come to terms with the borrower. The company acts as an interpreter (not in the actual sense because both the lender and the borrower understand the language) and tries to convey the issues faced by the borrower in an effective way and requests the lender to compromise and let go of some amount lent to the individual. Since the company helps to mange your problems and provide a solution, the activity is also referred to as debt management solution or simply consumer debt solution. Certain societies work specifically for these kind of problems and often provide free services to the borrowers. Christian debt solutions is an example of such societies. Certain groups of people maintain a broader sense of acceptance and deal with a particular geographic location or country. American debt solutions is one such company. Since these companies deal with problems arising out of credit card usage, their services are also referred to as credit card debt solutions or credit debt solutions in short.