A Short Guide To Resolving Credit Card Debt
Credit card debt is a huge burden that many people have to deal with. While it may seem like it is impossible to climb out of such a financial hole, there is help out there. Whether your credit is decent or it is badly in need of help, there are options available that can help reduce your debt. Before you place your head in your hands and give up, you should read the following information carefully.
Advice For Consumers With Decent Credit Scores
This section is intended for those that have decent credit. If your credit rating is frighteningly low, the information here will not be very helpful to you. With that said, if your credit score is below 640, you should refer to the section below.
These days, there are websites available for those who are interested in consolidating their debts. Help comes in the for of a loan, which can have pretty decent terms, depending on the company you choose to do business with. This is far different from a traditional bank loan in the sense that the terms are generally a bit more favorable.
Prosper and Lending Club are two examples of the loan websites that are being mentioned here. They allow borrowers to take out loans for as much as $40,000. If you are seriously in debt, this can certainly make a huge difference. Keep in mind that the maximum amount you will be approved for depends on several factors, including you exact credit rating.
While the rates for these lenders are generally lower than the rates that are charged by traditional banks, you should still shop around and compare the numbers to ensure you are getting the best possible deal. Keep in mind that you will be responsible for paying back the original loan amount, any interest accrued and any closing fees charged by the lender you are doing business with.
Here is an example of the amount that you can be expected to pay when taking out a credit card debt consolidation loan*
$10,000 Loan w/ 7% Interest
Monthly Payment Amount (3 yr term) – $308.77 : Total Paid – $11,115.75
Monthly Payment Amount (5 yr term) – $198.01 : Total Paid – $11,880.72
$15,000 Loan w/ 9% Interest
Monthly Payment Amount (3 yr term) – $477.00 : Total Paid – $17,171.86
Monthly Payment Amount (5 yr term) – $311.38 : Total Paid – $18,682.52
$35,000 w/ 8.5% Interest
Monthly Payment Amount (3 yr term) – $1104.86 : Total Paid – $39,775.10
Monthly Payment Amount (5 yr term) – $718.08 : Total Paid – $43,084.72
*This amount does not include closing fees that mat be charged by the lender. This amount is generally 1-5% of the loan amount.
There are a few things you can do to increase your chances of being approved for a loan, including:
– Avoid applying for too much credit around the time that you are looking to apply for a loan. Every time there is a credit inquiry, it lowers your score. This will make you eligible to borrow less than you would otherwise.
– Fill out your profile in its entirety. Lenders are far more apt to offer loans to those who are comfortable opening up about themselves a bit. Essentially, it makes you seem like less of a stranger to them, so they are more open to working with you.
– Try your best not to sound desperate. While you want the lender’s help, you have to make it seem like you will not fall apart if they are not willing to give you what you want. In many cases, being desperate makes people wary since they will assume you are saying whatever is necessary to secure a loan, regardless of whether this is truthful or not.
– Check your spelling and grammar. Just as with any other application you fill out, it is very likely it will end up in the trash heap if it is littered with errors. Appearance is everything, so take the time to make sure that your application and profile are free of any errors.
While there are many debt consolidation options available to consumers, this is the best option for those who have pretty good credit. If you are given a loan, make sure that you are strict with the terms and you pay the money back as promised. This will increase the chances of things being far easier for you if there needs to be another loan application from you in the future.
Advice For Those With Bad Credit Scores
Don’t worry! Just because your credit is not great, that does not mean there are no options available to you. While getting a personal loan may be next to impossible, finding a debt negotiation company like National Debt Relief can help you get your financial health back in order.
The first thing you must understand is how these companies can help you pay off your credit card debt. It is actually far more simple than most people believe. Basically, you have a company that contacts your creditors on your behalf and asks them to give you a bit of leeway when it comes to paying off your debts. In some cases, they are able to dramatically reduce your debt by simply asking for some of the balance to be forgiven.
Once they have a clear idea of how much you owe each company, they combine the amount and speak with you about a monthly payment amount that would be reasonable for you. Each month you remit payment to the debt negotiation company and they send a predetermined amount to each of your creditors once a settlement is reached. This takes a bit longer than the options that are offered to those with a better credit score, but many people have used these companies to get out of debt.
~ Things To Note
1. Every debt negotiation company is not the same. Each one has guidelines when it comes to the amount of debt consumers must have before they will offer help. In most cases, this number exceeds $7,500. It is not worth the effort for a company to fight on your behalf over a lesser amount.
2. Debt negotiation is often confused with debt consolidation. While they are similar when it comes to the terms of repayment, there is a huge difference. Consolidating your debts does not reduce them at all, while debt negotiation companies can help you decrease the amount you owe so that it is far more manageable.
3. There must be extenuating circumstances that have prevented you from paying back the amount you owe. Examples of acceptable reasons include divorce, loss of a job, lengthy illness and the death of a spouse.
4. All debt is not eligible for this type of program. All companies are willing to help with credit card debt, but the other kinds vary. For instance, many companies cannot help with IRS debt, child support, mortgage loans and speeding tickets.
Finding a solid company to help is extremely important. Since this is a personal financial matter that involves personal information, it is crucial that you don’t trust this to some random organization. Here are a few pointers that will help you find the right one.
– Head To The BBB Website
There are many consumers who have had negative experiences with debt companies and they have led to complaints being filed with the Better Business Bureau. Head to the site and punch in the name of the companies you are considering to see what type of information you can find.
– Make A Few Calls
You should call several companies and explain your situation to see what type of business you are dealing with. Take note of the attitude displayed by the person on the other end of the phone. If they are overly aggressive and seem to be intent on selling something, you should be very wary.
There are more signs that you should be on the lookout for, but these are the most important. Following this advice will increase your chances of finding a reliable company to work with.
As you can tell, there are options for people with all credit scores to get help paying back their credit card debt with or without a loan. Depending on the amount you owe and your financial standing, you can be out of debt in as little as three to four years and as many as 7-10. While this may seem a bit daunting, getting out of debt is a huge accomplishment that you should be proud of, regardless of how long this takes. Whether you decide to get a credit card debt consolidation loan or working with a debt negotiation company is the better option for you, it should be clear to you that there is actually a light at the end of the financial tunnel you are in.