Debt Consolidation Versus Debt Negotiation

Debt consolidation versus debt negotiation are two options that are available to you if you need debt assistance. When your monthly bills become too much for you to handle, it makes sense to use debt consolidation or debt negotiation for solving debt and credit problems. Debt Consolidation Debt consolidation services have prearranged debt repayment plans with most credit card and collection companies. When you sign up with a debt consolidation company you are offered a lower overall monthly payment based on a lower interest rate they have arranged with creditor. This payment is lower than what credit card companies offer you, saves you money every month and is often best way to consolidate debt. One benefit of a debt consolidation repayment plan is it will stop you from getting harassed by your creditors as long as you make new, lower monthly payments. The downside of debt consolidation repayment plan is that you have to cancel all credit cards that you include in plan. You are also charged your first payment you make toward program and an additional monthly administration fee. This administration fee ranges from flat fees of $10-$50, while others charge a $5 fee for each creditor. That means you'll pay about $30 a month that doesn't go to paying off your debts. The debt consolidation program benefits you if you have high interest rates or have higher credit card bills than you can manage. Some people like to make only one payment to one company for all of their debts. Debt Negotiation Debt negotiation is sometimes referred to as debt settlement. This is most often offered to people who can't handle a debt consolidation program. If you can't make minimum payments of a debt consolidation repayment plan or haven't made payments in past 3 months, a debt negotiation program is next step for solving debt and credit problems.

Credit repair scam - How to avoid being a statistic?

Credit repair scam - How to avoid being a statistic?

A good credit history is critically important for consumer. A bad credit will prevent you from getting a business loan, owning a home, or even a job. Promises to "fix" your credit are always made by credit consolidation companies, but they are seldom true. Here are some of important tips to avoid scams:

• First things first. Negative information cannot be erased if information is correct. Only inaccurate information can be corrected in your credit file. Credit file information remains on your record for seven good years from time it is reported to bureau. For bankruptcy, information remains on your record for ten years. All consolidated information about your credit bills you fell behind on, but are now paid, will remain on your report for time period mentioned above.

• Do not pay credit repair company unless their promises are kept. Remember, law is on your side. Federal law requires credit repair companies to give you a complete detailed explanation of your legal rights, a completely documented written contract, and above all, 3 days to cancel. This applies to all credit repair services including for-profit services, non-profit services, creditors and credit unions.

• Be wary about emails you receive. When you hover your mouse over link in email, you will know for sure if it is a trusted website or a fraudelent one. If fraudelent, report it to your bank promptly.

• You don't need a counselor to correct your mistakes in credit report. Take charge of it yourself. If you were recently denied credit, you can request a free credit report. Otherwise there is a small charge for it. Some states will allow you a free copy of your credit report once a year. It doesn't cost you anything to dispute or question items in your credit report. Get online or follow instructions from your credit bureau. The three major credit bureaus are Equifax (800- 685-1111), Experian (800-682-7654) and Transunion (800-916-8800). In most cases you will need to contact all three credit bureaus as information they have about you may vary.