Ted Batrons' No-Debt.net

Credit Card Debt Services: Do You Really Need One?

Ted Batron — Sun, 12 Oct 2008 05:53:28 +0000

Credit card debt services are everyplace. They are cropping up on TV, on the radio on billboards, in our email. The world is in debt. Going into debt is an avoidable state of affairs and there is always a solution that we can use to recuperate from it. We can for sure look for some help from credit card debt services. I know I write about this a lot, but it’s important to constantly repeat the mantra, BE CAREFUL! These services are designed to offer solutions to help people recover and become debt free, but many do absolutely nothing and charge thousands of dollars for something that you can do yourself with a little education and persistence.

Debt services if chosen properly are a valuable resource, that can provide you with a plan and the proper program to follow to get you out of debt fairly rapidly. These services can also increase your credit score, although this can take time.

These services are not cheap. Credit card debt services usually charge a set fee plus a percent of the debt that they settle for you. The fee can be as high as 25 percent. So if the fixed charge is 1500 dollars, and you have 10,000 dollars in debt - you could end up paying more than 4 thousand dollars to settle it. Money that you could have used to pay off you debt if you had chosen to conduct the settlement yourself.

Now, heres the kicker. If you are already behind in your debt, many credit card companies already have a settlement program in place. What some credit card debt services will do is call the company and accept the initial offer. So they end up charging you a lot of money for making a phone call that you could have made! Good deal huh - well, for them anyway.

Credit card debt services can help. And there are some good ones out there. But make sure you get some references. A reputable company will be glad to give you references of people who have used their services.

There are several guaranteed loan programs available. If you are not already behind, you may be able to use one of these programs to pay off any high interest credit card debt - destroy the cards! and then pay off the loan as quickly as possible. If you are already behind, you can still use these guaranteed loan programs.

Some credit card debt services can consolidate your debt without a loan. They actually act as a broker of sorts. They negotiate with your creditors, and they you make a single payment to the settlement company, and they distribute the money to your creditors. Be very careful of these services. In many cases they just accept the first offer, which may not be the best offer. In many cases they don’t pay the creditors as agreed, and the collection calls continue. Most of these companies will make sure they get paid first. So the money your paying will probably pay the settlement company before it pays your other creditors.

Why Should You Use Credit Card Debt Services?

• One reason is the high cost of maintaining credit card debt. Fees and interest can mean that simple purchases drag on for years and cost far more than they would have with cash. In many cases the minimum payment grows to the point that it is hard to keep up with.

• If the debt isn’t taken care of, bankruptcy may end up being the outcome. Credit card debt services can help you avoid bankruptcy.

• Debt services can help you “get right” with your creditors, and possibly improve your credit rating ultimately. Although, quite honestly, anything other than paying your debt on time and in full will result in an initial decrease in your credit standing.

• Not being sure of how to navigate the credit system, or what the laws are. What are your “debt rights” involving consumer credit, legal rights and debt liability?

I can’t tell you whether or not you should consult with a credit card debt services provider. Only you know your financial situation. But you should always know your credit rights involving debt. Legal options are available.

Understanding Credit Score Information

Ted Batron — Fri, 10 Oct 2008 19:40:53 +0000

Understanding Your Credit Score

What does your score mean?

This rating system is meant to develop a snapshot of the risk you currently represent to a lender. Several parameters in your credit file, including length of credit history, number of open accounts, loans, mortgages, public records, and others are formulated to produce a three-digit score between about 300 and 950. There are other scores used by lenders and insurance companies (some of which are developed by FICO®) such as Application and Behavior scores. These other scores take other information into account. Usually a lender will use a combination of your credit score with other factors when determining your risk. They all have the same objective, to determine the borrower’s potential risk. Regardless of whether the score was generated by FICO® or a system based on FICO® parameters, they all yield an industry standard three-digit score. This score places the borrower in one of three main categories (we named the third one ourselves.)

Prime, sub-prime, and shafted

Prime If your credit score is above 680, you are considered a “prime borrower” and will have no problem getting a good interest rate on your home loan, car loan, or credit card.

Sub-Prime If your credit score is below 680, you are “sub prime”, and will likely pay a much higher interest rate on your loan.

Shafted Below 560 is the shafted score. At least that is how most lenders and credit issuers perceive it. You can still get a credit card but you will likely be hit with a security deposit or high acquisition fee. In addition to that your interest rate will likely be 22 to 23%. You can forget about most home loans and the majority of new car loans at this score. Below 560 is no place to be. You will pay much, much more in higher interest and unnecessary fees. You may even pay more for your insurance rates. A very low score can even prevent you from getting a job with many companies. If your in this catagory Click Here.

How are credit scores calculated?

The methods of calculating your credit score may differ slightly depending on the credit bureau. When obtaining your score from one of the Credit Bureaus it is important to understand that your score does not come directly from FICO®. It is adapted to each bureau and is given its own name: Equifax uses “Beacon”, Trans Union uses “Empirica”, and Experian uses “Experian/Fair Isaac.” These scores are also referred to as your “Bureau Scores.”

Since your score is derived from your bureau data, it will change every time your reports change. However your score is calculated, it will always take into consideration many categories of information. No one piece of information or factor determines your score. As the information in your credit report changes, the importance of one or several factors may change in your score. Lenders look at many things when making a credit decision, including your income and the kind of credit you are applying for. However, your credit score does not reflect these facts as it only evaluates the information retained by the credit reporting agency.

To Learn More Click here.

What factors affect your credit score?

There are five factors which are used in credit scoring calculations that determine your overall credit score.

Previous Credit Performance (Payment History) 35% A lender wants to know what your payment history is like. Have you paid everything on time, are you late on anything now, and so on. Your payment history is just one piece of information used in calculating your score, although it can be the very important.

Current Level of Indebtedness (Amount Owed) 30% How much is too much? Can the borrower pay me and still afford to pay his other bills? Not necessarily. Having available credit can actually help your ratio of debt to available credit. These are the types of questions that most borrowers want to know and the answers are almost as important as your previous credit history.

Amount of Time Credit Has Been In Use (Length of Credit) 15% Generally speaking, the longer the credit history the better your score. However, this factor only makes up 15% of your total score so even young people, students or others with short histories can still score high overall as long as the other factors show good. If you are new to credit than there is little you can do to improve this part of your score. Open an account and be patient.

Pursuit of New Credit (10%) Credit is much more popular today. Just look at the number of credit card offers you get via the Internet and in the mail. Consumers can now shop for credit and find the best terms to meet their needs. Each time someone runs a credit check on you, it creates an inquiry.

Fair Isaac has changed some of its calculations to account for these new trends. Specifically, they treat a group of inquiries - which probably represents a search for the best rate on a single loan - as though it was a single inquiry (note: this only applies to auto or mortgage loan inquiries.) For example, auto loan inquires that are within 14 days of each other only count as one inquiry.

Types of Credit Experience (10%) A healthy mix of different types of credit, installment loans, retail accounts, credit cards, and mortgage. This score is not normally a key factor in determining your score but it can help a close score. Its not a good idea to try and open different types of accounts just to try and make this factor better. It will likely reduce your score in other areas. You should never open accounts you don’t intend to use anyway.

What type of accounts you have, and how many, can make a big difference. The optimal ratio of installment versus revolving accounts depends on your profile and differs from person to person. One factor that seems to have significant influence is your percent of open installment loans. Too many can lower this portion of your score. For more information Click here.

Improving your credit score

Now that you know how your score is calculated, you can begin making changes to your current financial planning. The best things you can do are simple.

Pay your bills on time. Sounds simple, but this is the biggest thing you can do to keep your score high. Delinquent payments and collections have a major negative impact on a score.

Keep your balances low on unsecured revolving debt like credit cards. High outstanding balances can affect a score.

The amount of your unused credit is an important factor in calculating your score. You should only apply for credit that you need.

Make sure the information in your credit report is correct. If its not, dispute it with the credit agencies and/or with the creditor directly.

Removing negative items on your credit reports has the biggest impact on your credit score. Generally, negative items stay on your reports for seven years but you can hire a professional credit report repair service such as Lexington Law Firm to do it for you.

You can try to understand the laws and your self, but we have found it’s so much easier to have someone do it for you. We strongly recommend using Lexington Law Firm, they are the industry leaders.

Consumer Credit Law - Do You Need A Credit Attorney?

Ted Batron — Fri, 10 Oct 2008 19:27:44 +0000

Consumer credit law. Just the name sounds ominous. It brings up images of debtors prisons and courtrooms where credit attorneys argue about your worth as a person just because you are not able to pay your debts as agreed. Don’t worry. There aren’t any more debtors prisons. But a low credit score might make you feel like you’re in one.

Listen, things happen. Circumstances change. Creditors sometimes wear blinders. All they want is their money. Credit law is daunting and complicated. I know I constantly preach about how you can settle your debts yourself, and I believe that you can. You need the right education, the right tools and above all the commitment. In some cases, you are going to need someone specializing in consumer credit law.

Even after you have negotiated and settled your debt, marks and blemishes can remain on your credit file for years. This can (and it’s frankly certain in this economic climate) prevent you from getting home and auto loans. Even if you are able to borrow, you will get the highest rates and end up spending money on increased fees and charges to offset what the lender perceives at an increased risk.

Even if the negatives on your credit report aren’t your fault, as in the case of identity theft. The majority of credit reports contain errors of some kind. And even if the entry is accurate, but negative, you need to try to get it removed.

You have debt rights. You have the law on your side. The FDCPA ( Fair Debt Collection Practices Act) protects you from unscrupulous creditors. But you do have to have a foundation, a basic knowledge of debt law. I don’t usually speak too highly of lawyers, I mean, who does. But the truth is that we all hate ‘em, until we need ‘em.

Debt laws are made to protect you. But a good credit lawyer can’t hurt. These guys have taken on creditors and collection agencies before. They know what the credit bureaus can and can’t do. They know the procedures that can quickly get negatives removed from your credit report.

I’m not singing their praises. I’m just saying that the time comes for a little help, when you may not feel you know enough about credit law. You may need to turn to a professional who is experienced at dealing with credit bureaus and can make sure your credit rights are not violated!

If you have issues like a credit judgment or two on your credit report, there are procedures to get this removed. Getting a judgment vacated is not easy, but it can be done. It’s really the experience factor that I think is important here. Credit lawyers have done this before. They already know what we as consumers would have to learn. And even after we learn it intellectually, we are still completely unfamiliar with the court procedures. If you are unable to get the debt judgment vacated, it can remain on your credit file for 10 or more years.

Practicing credit report law takes time to learn. While there are a lot of simple things you can do to correct your report, not all reports are simple. Many, in fact most, have numerous errors. In the case of identity theft, the errors and negative information can be almost insurmountable. Identity theft is definitely an area where you are going to need to contact an attorney who practices consumer credit law to correct the issues on your credit report.

Just How Funny Is Bankruptcy - Well,,,Pretty Funny

Ted Batron — Wed, 08 Oct 2008 22:04:05 +0000

I thought this was so good, I had to put it up here.

Christian Credit Counseling? - Be Careful!

Ted Batron — Wed, 08 Oct 2008 18:02:06 +0000

Debt Settlement Resources

Ted Batron — Fri, 03 Oct 2008 20:34:48 +0000

While there are hundreds of debt settlement resources available to the consumer today, you really need to follow the old axiom “let the buyer beware”. In many cases credit card debt services are just calling the credit card company and taking the first offer they can get. Like I have said in many other posts, MOST credit card companies are willing to negotiate to some degree. Many will already have a settlement offer in mind!

A debt settlement company SHOULD be seeking the best deal for their client. But in too many cases they will just call the creditor and find out what they are willing to settle for, package it in the form of an offer they can present to you, and then act like they have had to do some real work.

What a scam. Not all debt management resources are honorable. They charge you 3-5 THOUSAND dollars for what amounts to a few phone calls. I don’t know about you, but I certainly don’t call this debt negotiation. That’s why I constantly say that you can really do this yourself.

Another problem is that consumer debt relief should involve more than just the negotiation. It should involve ongoing education, consumer debt management advice and debt management counseling. Once you get out of debt, you need to make sure you have the knowledge available to stay out.

I know I have always said that it is a last resort, and it is, but don’t ever take bankruptcy off the table. But do take it very seriously. If you have a business that has massive unsecured debt, you should look at bankruptcy options as well as looking into all other available debt relief options.

The moral of this story is that you should know what the debt settlement resources and options are before making a decision. Education is key to getting out of debt.

Bailing Out The Banks

Ted Batron — Fri, 19 Sep 2008 05:03:44 +0000

The government doesn’t have the money to do this. They are already operating on borrowed money and don’t have enought to meet current obligations. Now they want to get us into the banking business?

This is your money people. Debt doesn’t just effect the private sector. Now, the Feds have decided to take trillions- YES, THAT IS TRILLIONS! - of dollars of money that they do not have to bail out the banks. It’s all very well and good that the banks don’t go under, but its still a bandaid on a gunshot wound.

I can sum up my opinion of this in one sentence. Where will they get the money?

Tax Debt and How To Deal With It

Ted Batron — Wed, 17 Sep 2008 23:45:03 +0000

There will be those that disagree, but I have basically one opinion on tax debt. Let someone who knows the system handle it for you. Don’t attempt to negotiate with the IRS yourself, you will get screwed. Thats about as straight as I can give it to you. There are plenty of good attorneys who can handle tax debt for you. They have negotiated it before. They know the law, they understand the system. They problem is that most of the IRS employees have limited understanding of the tax code. But not to worry, along with their complete lack of knowledge, they also get far reaching power to collect.

They can seize assets, seize wages, seize bank accounts ** WITHOUT GOING THROUGH DUE PROCESS OF LAW ** Thats right - they don’t have to use the court. This is a debt where they actually can put you in jail if it gets that far. I don’t want to be all gloom and doom. But if you have substantial tax debt, this is the area where I do not recommend that you handle it yourself. The knowledge involved is just too specialized and too complex.

Judgement Debt

Ted Batron — Wed, 17 Sep 2008 23:09:40 +0000

If a creditor sues you in court and obtains a judgement, it can create a world of problems for you. It is extremely long term, and almost impossible to remove from your credit report. A debt judgement gives the creditor certain rights to collect the debt that they didn’t have when it was a simple unsecured, collectible debt. They now have the right to attach your wages, seize certain property and use other remedies that were not available to them before.

The bright side of this is that you can still make a deal after losing a judgement. Its is however difficult to get it removed from your credit report, and you will need to make sure that you negotiate this BEFORE you make a payment agreement or a settlement. It is extra work for the attorney, and without you giving them something in return - they just wont do it.

If you offer to pay 50% - and they come back with an offer at 75% of the debt you might want to agree to it if you can afford it with the stipulation that they have the judgement vacated when the bill is paid.

You can deal with judgement debt, it’s just more complicated.

Student Credit Card Debt

Ted Batron — Wed, 17 Sep 2008 18:53:51 +0000

Every student should watch this. Its important to know what debt can do, and it’s completely entertaining.