Posts Tagged ‘debt’

Posted on May 25, 2009 - by admin

How Debt Consolidation Affects Your Credit Score

Many people that have considered debt consolidation as a way of getting out of a financial crisis have wondered how it would affect their credit score. The truth is that in most instances it will greatly increase your credit score and will not hinder you in anyway from obtaining a loan in the future which you might need later on for a housing project or a life insurance plan.

When you consolidate your debts you’re literally just paying them off earlier than is required by the lender. You’ll still be paying the exact amount that you owe the lending institution, so the payment will result in a positive rating on your credit score.

However, there is one thing to consider when calculating any affects on your credit rating. A small percentage of your rating is based on the length of your credit history. This category actually makes up for about 15 percent of your overall score.

Even if you’ve made every payment on time, if you’ve got a short credit history, this can affect future loans. To avoid this problem, some experts advise that you pay the balances off on your credit cards, but keep one or two of your oldest accounts open. This will help you retain the length of your credit history and still eliminate the actual debt.

Posted on February 25, 2009 - by admin

How to Deal With Credit Card Collection Agencies

Dealing with credit card collection agencies can be intimidating when the debtor is facing endless phone calls and letters streaming into the mailbox demanding the money that is owed to the creditor. There are simple ways to become a confident debtor.

When the consumer is aware of their rights and the rights that come with the process of collections they can be sure to protect themselves when it comes to dealing with credit card debt collections.

First, know when and how the credit card debt collector is allowed to contact the debtor. The credit collector is allowed to contact the debtor over the phone, through the use of mail or electronic mail and even in person. The debt collection agency can contact the debtor through eight in the morning and nine in the evening through the telephone.

There are some debt collection companies that choose to contact the debtor at their place of employment. This can be embarrassing and can disrupt the work environment. However, if the creditor continues to contact the debtor at their place of employment after the debtor has stated that the employer disapproves such behavior, than this is not fair debt collection practices.

It is important to know your rights. Many collection agencies will negotiate the amount which must be repaid to the collection agency. This is because the collection agency has purchased the debt for a fraction of the price, in the tune of cents to the dollar – which means that even a partial payment can lead to the collection agency turning a profit on the collection.