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Follow on Google News | How Debt Consolidation Can Build Your CreditNonprofit credit counseling services can help improve credit and get you out of debt in 5 years or less.
By: Michael J Brazier Debt consolidation- Making payments on time is the biggest factor in what affects your credit rating on a regular basis. 35% of your score is made up of timely monthly payments each billing cycle. In a consolidation plan, the due date is changed to coincide with a time that better fits your other monthly obligations and pay schedule and ensures timely payments right from the start of enrollment. Did you know? Spending more than 30% of your available balance lowers your credit score? That means if you have a credit line of $5k, keeping a balance of more than $1500 is negatively impacting your credit. 30% of your credit score accounts for how much total outstanding debt you owe. These accounts may be being paid on time every month but if the balance is above 30% of the credit line the payments aren’t helping as much as they could. Standard minimum monthly payments are designed to pay off 1% of the balance with every minimum monthly payment. That means if you stop spending on your account it could take around 100 minimum monthly payments to pay back your total debt at the standard rates, or 8.3 years. In a debt consolidation plan the interest rates are reduced to lower fixed rates, usually in the single digits. This allows the consumer to have the majority of the payment apply to the balance instead of the interest, bringing the balances down much faster- lowering your overall debt amount at an accelerated rate. Standard rates and terms issued by big banks direct to consumers are set at a rate that would take over 8 years to payback with minimum monthly payments. In a debt consolidation plan, the minimum monthly payment requirement coincides with the interest reductions in an effort to get the consumer out of debt in 5 years or less, applying the majority of your minimum monthly payment to the principle balance not the interest fees. You can still obtain new lines of credit while consolidating you debt. It’s not ideal….as the point is to get OUT of debt not incur more- but you can nonetheless. Not every account has to be consolidated either. Dent consolidation is not an all or nothing deal. Pick and choose which creditors are charging you too much in interest and only consolidate those accounts. You can always add or remove accounts from a consolidation plan at a later time without being charged anything additional. One lower monthly payment. Lower fixed interest rates. No late fees. No creditor calls. Improving credit on a monthly basis. Debt free in 5 years or less. For more free information or a free financial consultation contact a certified credit counselor at a nonprofit debt consolidation organization accredited by the Better Business Bureau. Call 800-905-1563 or visit our website freedomdm.org and complete our contact request form or LIVE CHAT with a counselor during business hours. Freedom Debt Management is a BBB accredited A+ nonprofit organization helping people become debt free one household at a time. You can be debt free, Freedom Debt Management can help. # # # Certified credit counselors work with potential clients to assess their current financial situation and determine what their best option may be. End
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