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How Debt And Bill Consolidation Work

How Debt And Bill Consolidation Work

Although you probably won’t find anyone who says that want to get heavily into debt, the reality is that many people find themselves in that situation for a variety of reasons, including taking on too many credit cards and personal loans, high medical bills, your children’s or your education expenses and just not paying close enough attention to your personal financial situation. If you find yourself in that situation and are wondering what you should do, you might want to consider a debt or bill consolidation. What is debt consolidation? It is simply that – consolidating all your debt into one payment and taking the hassle out of it so that you can become debt-free and avoid an awful lot of stress in the meantime.

So how do you get started on a bill and debt consolidation plan? The first thing you do is find out exactly how much in debt you are. To do this you will need to collect all of your account statements and write down the name of the creditor, the total amount that you owe that creditor, and the number of your monthly repayments.

The next thing you do is make up a realistic monthly budget. Go over all over your monthly expenditures such as rent or mortgage payments, utility bills, car loans, insurance payments, child care costs, grocery money, and upkeep for your car. Then add in some for miscellaneous expenses such as hair cuts and birthday gifts, things that don’t come up every day. Total it all up and that is the amount of money that it costs you every month to maintain a basic living.

The final part of organizing yourself is to subtract your monthly budget from your take-home pay. The amount left over is the amount that you have available to pay off your creditors each month. Now, this amount is likely to not be enough to make the minimum payments, which is why you need a debt and bill consolidation plan.

Now that your finances are organized and you know exactly what you can afford to pay in debt repayments each month, you need to contact each creditor and negotiate with them a lower payment amount. Most creditors are quite used to this and willing to help you out as long as you are willing to pay them what you can. Obviously, they realize that you can’t give them what you don’t have. Just be straight forward with them – you’ll be surprised at how accommodating they can be!

How To Use A Secured Credit Card To Repair Your Credit

How To Use A Secured Credit Card To Repair Your Credit

One way to repair your credit is to obtain a secured credit card. You may wonder how this is possible with bad credit when you will most likely be declined when filling out a credit card application. However, without a credit card, you will have a hard time proving to creditors your responsibility in making payments on time.

If you have ever had credit cards, paid a bill monthly, or obtained a loan, you have a credit rating. When you make payments to a creditor, they report these payments to credit reporting agencies that compile your credit report and track your credit history. If you miss a payment, or even worse, your debt gets sent to a collection agent, this affects your credit rating negatively and may prevent you from obtaining more lines of credit when you need them in the future.

As soon as you realize you are in this situation, it is crucial that you immediately begin to make an effort to repair your credit rating. To most people, this seems like a difficult thing to do, but doing nothing to repair your credit will only prolong the damage for up to seven years. Until your credit is better, you will find that you are barred from any type of loan or even activities that require credit, such as renting a car.

Try a secured credit card. Secure credit cards are marketed especially toward individuals with poor credit. These credit cards work when the customer applies a deposit equal to their credit limit. For example, if you make a deposit of $100, your credit limit will be $100. The credit card company then uses your deposit toward any balance on the credit card resulting from late payments.

This type of credit card is risk-free for the company that issues it because they can always deduct the balance from your deposit, so it makes sense to issue these cards to people with poor credit. One drawback to secured credit cards, however, is the annual fee that most regular credit cards don’t charge.

After you have obtained one of these secured credit cards, use it sparingly but regularly, and make sure you mail all of your payments on time. This will enable you to slowly, but surely, repair your credit. You will demonstrate to your creditors that you are trustworthy, responsible, and pay your bills on time.

Taking steps towards repairing your credit will eliminate the risk of keeping your credit rating “poor” for up to seven years. However, after seven years the black marks on your credit will finally be taken off, so waiting is always an option. If waiting

Maintaining A Good Credit Rating

Maintaining A Good Credit Rating

Nowadays, availing a credit card is truly a difficult task. You need to have a good credit history in order for the bank to see that you are fully capable of acquiring debt and later on paying it off. Aside from this, you also need to have a stable monthly income wherein the bank can generally rely on to decide if you are truly a creditworthy individual. However, not all people possess such good credit history and high monthly incomes, and because of these reasons, they get rejected in their application for a credit card.

Maintaining Good Credit Standing

In the world of credit and banking, it is extremely important that you maintain a good credit history or rating for you to be considered as a credible person; and of course, regarded as a person who is truly capable of owning a credit card. During the initial periods, especially if you are only starting off building your life and future, it is easy to maintain a good history with regards to finances.

Increasing Debt History

However, as circumstances may differ in the long run and you avail all sorts of assets, properties, and services, your debt history starts to increase. This in turn may lead you to have a negative implication on your credit history. And in addition, in any case, that you may acquire such a huge amount of debt, it naturally makes it more difficult for you to pay it off. Basically, you have acquired more debt than you can actually pay for.

Thus, even in the early stages, you must remember that having a good credit rating is very important if you intend to acquire another credit card in the future. Having a good credit rating not only entails you of receiving a credit card but also receiving a good deal out of it. Moreover, if you have a very good history, such as nonexistent late payments and non-violation of terms and conditions, then it means that you can have a better deal for your credit card. It means that the bank can give you a higher offer on your credit line. It will give you more opportunities to purchase much more expensive items and can even give you more offers such as bonuses and discounts.

Be A Responsible Credit Owner

In order to maintain a good credit history, you generally have to be a responsible person in terms of your finances. If you are responsible for your finances, then you can be a much more credible person to avail of a credit card. You have to make sure that you do not overspend beyond your budget and that you pay off your debt at the specified time.

Having a credit card truly can give you limitless opportunities especially if you are insistent on buying items every now and then. However, as you have such opportunities, always remember that in the end, the amount that you are spending today is accumulated for you to pay in the future. If you do not want your future to be spent on debts, then perhaps you may want to have a second thought in what you are going to spend on today. All you have to remember is that you should maintain a good credit history so that you can provide yourself with a lot more opportunities in the credit world.