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Debt Relief: Difference between revisions
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The steps most of these agencies take to help debtors eliminate debt are: | The steps most of these agencies take to help debtors eliminate debt are: | ||
# Help debtors to assess their debt situation. | |||
# Offer debt counseling, such as, how to avoid overspending and advise in handling existing debts. | |||
# Help the client to build and maintain good credit. | |||
Most financial advisors agree that the most important step a person must take before seeking counsel is to change their money management skills. The debtor must change the way he/she thinks. They must rid themselves of all financial anxieties or debt will probably accumulate again. | Most financial advisors agree that the most important step a person must take before seeking counsel is to change their money management skills. The debtor must change the way he/she thinks. They must rid themselves of all financial anxieties or debt will probably accumulate again. | ||
== | ==Credit Management== | ||
The most difficult thing to grasp when dealing with management of credit is understanding how one obtains credit in the first place. Usually a creditor follows a checks and balance system of determining if someone has the ability to obtain credit. Specific criteria must then be met in order to obtain credit. Creditors will then solicit a credit history from credit reporting agency such as [[Debt Relief:Bibliography#Experian | Experian]], [[Debt Relief:Bibliography#Trans Union | Trans Union]], and [[Debt Relief:Bibliography#Equifax | Equifax]]. A number is assigned based on past history or whether or not there is a history at all. That number is called a [[Debt Relief:Definitions#Beacon or credit score |Beacon or credit score]]. If the score is low, then one is considered "high risk" and chances are the request for credit will be denied. The higher the credit score, the more likely one would receive approval. While it may be great to increase the amount of credit to increase the score, each time an applicant applies for credit, the score drops. | The most difficult thing to grasp when dealing with management of credit is understanding how one obtains credit in the first place. Usually a creditor follows a checks and balance system of determining if someone has the ability to obtain credit. Specific criteria must then be met in order to obtain credit. Creditors will then solicit a credit history from credit reporting agency such as [[Debt Relief:Bibliography#Experian | Experian]], [[Debt Relief:Bibliography#Trans Union | Trans Union]], and [[Debt Relief:Bibliography#Equifax | Equifax]]. A number is assigned based on past history or whether or not there is a history at all. That number is called a [[Debt Relief:Definitions#Beacon or credit score |Beacon or credit score]]. If the score is low, then one is considered "high risk" and chances are the request for credit will be denied. The higher the credit score, the more likely one would receive approval. While it may be great to increase the amount of credit to increase the score, each time an applicant applies for credit, the score drops. | ||
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*Apply for a [[Debt Relief:Definitions#secured card | secured card]] or deposit money in a checking account. | *Apply for a [[Debt Relief:Definitions#secured card | secured card]] or deposit money in a checking account. | ||
*Apply for a department store or gasoline credit card and build small balances, '''but pay them off in full each month'''. | *Apply for a department store or gasoline credit card and build small balances, '''but pay them off in full each month'''. | ||
*Do not use credit cards to purchase food. The amount in interest is nearly 10 times more than what one meal would have cost if | *Do not use credit cards to purchase food. The amount in interest is nearly 10 times more than what one meal would have cost if cash was used instead of a credit card. | ||
*If possible, consider transferring the balance of a credit card to a lower interest rate card. If you do this, immediately destroy the card with the high rate and close the account. | *If possible, consider transferring the balance of a credit card to a lower interest rate card. If you do this, immediately destroy the card with the high rate and close the account. | ||
Over time, your credit score will improve, and you will qualify for [[Debt Relief:Definitions#unsecured credit card| unsecured credit]] cards on your own. | Over time, your credit score will improve, and you will qualify for [[Debt Relief:Definitions#unsecured credit card| unsecured credit]] cards on your own. | ||
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For those who need assistance managing their credit there are a variety of choices and options available. In an article by Hispanic magazine, financial author Julie Stav explains what a [[Debt Relief:Bibliography#Self Help | FICO]] score is, how credit bureaus calculate it, and ways to improve your score. An article by U.S. News and World Report states the following steps to keep the score manageable: | For those who need assistance managing their credit there are a variety of choices and options available. In an article by Hispanic magazine, financial author Julie Stav explains what a [[Debt Relief:Bibliography#Self Help | FICO]] score is, how credit bureaus calculate it, and ways to improve your score. An article by U.S. News and World Report states the following steps to keep the score manageable: | ||
# Pay bills on time. | |||
# Pay down debt. | |||
# Maintain long-term credit relationships. | |||
# Do not apply for too many loans. | |||
A great self-help guide to consider is Repair Your Own Credit which instructs debtors in how to repair and reestablish credit. It also lists organizations that will give free or low cost assistance in helping one stay out of debt. NEA Today, refers to credit management agencies such as Equifax and warns people about credit repair clinic rip-offs. These agencies do not do anything that you cannot do yourself. The counselors at Credit Union Magazine suggest that bankruptcy be the last resort in debt relief. | A great self-help guide to consider is Repair Your Own Credit which instructs debtors in how to repair and reestablish credit. It also lists organizations that will give free or low cost assistance in helping one stay out of debt. NEA Today, refers to credit management agencies such as Equifax and warns people about credit repair clinic rip-offs. These agencies do not do anything that you cannot do yourself. The counselors at Credit Union Magazine suggest that bankruptcy be the last resort in debt relief. | ||
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* [[Debt Relief:Bibliography | Bibliography, Resources, and Further Readings]] | * [[Debt Relief:Bibliography | Bibliography, Resources, and Further Readings]] | ||
[[Category:New Media]] | |||