Credit Score Rescue

Loans can be acquired to consolidate your unsecured debt. Consolidation loans are used to combine your payments into one, easy to manage payment every month. Usually, these loans are collateralized, meaning that you agree up front to allow the forced sale of a major asset, like a house or possibly a car, to pay a debt that you can no longer manage.

First, you must understand what unsecured debt is. Unsecured debt is money owed to a creditor for which there is no collateral taken. Mostly, this applies to credit cards as the credit card company trusts you to pay the balance down.

For consumers with multiple credit cards, this can sneak up on them and overwhelm their finances. All of a sudden, you find yourself paying out more than you are bringing in.

To pay of that unsecured debt, consolidation loans are a common solution. An unsecured debt consolidation loan does not lower your balance owed as in a debt negotiation settlement. Simply, all your debts are combined together and you make one payment opposed to the several you do now.

This is done for several reasons with the most prominent being to pay off that debt at a lower interest rate. The unsecured debt consolidation loan will probably be at a much lower interest rate than a standard credit card charges. Credit card rates can range from 7% or 8% to more than 30% in extreme cases.

You may be able to call your card company and ask for a better rate. They might oblige you if you have been a good customer for an extended period of time. Then again, they may not. It will depend on the card issuer involved.

With a debt consolidation loan, the rates can be comparable to rates for new mortgages at around 7.5% at the present time. Again, this depends on the PLR at the time the loan is applied for. As I said earlier, most of the time these consolidation loans are collateralized for lender security.

However, it is possible for a consumer to get a bit over extended and actually get an unsecured debt consolidation loan. In this case, the term unsecured debt consolidation loan means that you take the loan to combine all your bills that is NOT collateralized. This can be done if you have a good or outstanding credit rating. In this instance, the loan company will be comfortable in extending you the funds you need.

Of course, the main idea is to save money on the month in the form of lower interest charges, but there are other benefits as well. By taking out a debt consolidation loan, you will essentially be making timely payments which will reflect well on your credit score.

Perhaps you have been getting calls from your creditors and felt the pressure of your debt pressing down. This may cause you to lose sleep and/or have other physical afflictions associated with stress.

All of this will be eliminated by combining your unsecured debt with a consolidation loan. Consolidation of your debt may be the solution that keeps you from filing bankruptcy, which will affect your credit score for quite some time to come.

An unsecured debt consolidation loan may be just the ticket you are searching for.

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You’ve found yourself in debt and now it’s time to take a practical look at your situation. There are many types of debt, including credit card bills, medical bills, mortgage, automobile loans, household bills, education loans, and alimony or child support payments.

At this point, it doesn’t help to wonder how you got into debt, it’s time to determine how you are going to get out of debt, how this debt is affecting your financial credit score and what steps you will take going forward to make sure this will not occur again.

One way to eliminate debt is to file for bankruptcy. While once thought of as taboo, the word “bankruptcy” is now more commonplace than ever. Everyone is feeling the pinch of the economy and those who choose bankruptcy are actually on the road to recovery.

An important consideration for those in debt is what your situation is doing to your financial credit score. Credit scores are frequently called “FICO scores” because most credit bureau scores used in the United States are produced by Fair Isaac and Company, or FICO. FICO scores are provided to lenders by the three major credit reporting agencies: Equifax, Experian, and TransUnion.

A FICO score measures your creditworthiness. The score ranges between 300 and 500. The higher the score, the lower the risk. Specifically, borrowers with high FICO scores are typically less risky borrowers than those with low scores. They are more likely to pay off their debt and not default on a loan. The score is based on many factors, including payment history, outstanding debt, length of credit history, negative credit information such as bankruptcies and collections and the amount of credit used vs. the amount of credit available.

Each of the 3 credit reporting agencies may report different FICO scores for you. The agency only regards the data in your credit report at that agency. If your current scores from the three credit reporting agencies are different, it’s probably because the information those agencies have on you is different.

Bankruptcy attorneys can help you see past your current debt situation. They have many bankruptcy tools at their fingertips, including a credit score evaluator, to help you see and understand your current credit score as well as a projection of what your score will be after filing bankruptcy. There are many factors to take into consideration when determining the best route for you to get out of debt. Be sure to utilize all your resources and become an informed consumer before making any decisions.

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The Fair Isaac Company invented credit scoring in 1958 as a quick, easy way to assess the potential risk associated with lending to certain people. This number, which is sometimes called a FICO score, is generally between 300 and 850, and the higher the better. When you pay a bill late, your score could drop anywhere from 10-100 points. If you’ve undergone a foreclosure, then you could see your credit score decrease of as much as 300 points! We often lose sight of the fact that every financial decision we make is being recorded and while it may seem too easy to say “I’ll just pay that off when I get the money,” the points are whittling away off our credit scores.

If you are to take away one lesson about improving your credit scores range, it’s this: late or missed payments are bad, very bad. Payment history accounts for 35% of your credit score and includes everything from mortgage or rent to utilities, cell phone bills, credit cards, store charge cards, medical bills, auto loans, college tuition bills and student loans. If you are 30 days late on one payment, then it’s not likely to cause severe damage to your report. It’s only listed when you are “currently 30 days late” and even then, you can usually negotiate with your lender to cut you some slack since you’re normally a good borrower. If you’re often 30 days late, then you may have a hard time convincing anyone to give you a favor. Once you’re sixty days late, your credit score will be slightly damaged, but when you hit more than 90 days you’ll have a tarnished score, which could be something like 100 points deducted for up to 7 years! After 120 days, it’s likely you’ll have a charge-off on your record or an account that slips into collections. Short-term collection accounts will hurt you 50-75 points, although financial advisers at the Gallant Group say that older accounts won’t hurt you as much, as these are just “a blip on the radar screen,” they said. However, if you’re applying for a new loan, then you may occasionally be required to go back and resolve any past due items on your report before being approved.

The most damaging “big ticket items” on your credit scoring are bankruptcies, foreclosures and repossessions. A bankruptcy credit report is the quickest way to derail your score, with the longest-lasting effects. One claim can plummet your score down to the mid-400s for the first year. If you engage in smart finances over the next year, then you may be able to resurrect your credit score back to the 600s, yet lenders will still see “bankruptcy” on your files for ten years.

Foreclosures are just as ugly and hurt your chances at getting approval for another mortgage in the future. Credit scores usually drop to the low 400s because so much delinquent activity gets reported; first the monthly missed payments, then the subsequent foreclosure hit. Repos are the least damaging of the three, but will still knock a perfect score down to the low to mid-500s.

There are many myths about credit scoring, but here are a few. The first myth is that closing accounts can improve credit scores. The reality is that you can’t repair an account by simply shutting it down. When you close an account, your total available credit shrinks, which makes your situation look worse. Closing accounts also makes your credit history appear shorter. Instead, pay down your debt. The second myth is that checking your FICO score can hurt your credit.

You can check your score as much as you want, although you’re only entitled to one free credit score each year. Credit lenders checking your score to send you new offers won’t impact your number either. Applying for new lines of credit is what actually affects your score, although you can shop around for auto loan quotes and mortgage quotes as much as you want within a 14-day period, since it’s only counted as one inquiry or 5 points off for 30 days). Another myth is that credit counseling is as bad as bankruptcy. Your credit counseling program will not be explicitly stated on your report, although your lenders may report you as late and any settlements made may show up on your report, all of which can hurt your score. This is nowhere near as damaging as bankruptcy, but it’s best to turn to credit counselors only if you’re seriously derailed and need those settlement offers.

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