If you have trouble managing your debt on your own, you’re not alone. Many people go to a debt consolidation company to help deal with creditors and lower their debt payments. Before you hire a company, make sure you get some information to help you choose.
Look at the company’s reputation. Check with the Better Business Bureau (www.bbb.org) to find out if other consumers have made complaints against the company. Several unresolved complaints against a company is a sign that they don’t follow through on their promises to customers. No matter how much you may want to go with a company, it’s best to move on when their BBB standing isn’t acceptable.
Make sure the company offers different services. A good debt consolidation company will do more than combine your debt payments; it will also give you sound money management advice. Look for a company that will help you learn to budget and stay out of debt as well as work with your creditors to reduce your debt.
Choose a company with reasonable prices. Debt consolidation companies should charge reasonable fees for the services they provide. They also should be upfront about the fee. If a company hides details about the cost of their services, be suspicious. Ask about having your fee waived or reduced if you will have a hard time paying it.
Watch out for scams. Unless you have a lot of money, debt management will not be a quick fix. Stay away from debt consolidation companies that offer those “too good to be true” solutions to your debt. Expect to send affordable monthly payments for two to five years to get your debt paid off. Anything other than that is a watch-out.
A lot of debt consolidation companies take advantage of vulnerable consumers. Take your time and look for a good company to keep from becoming the victim of a scam.
Showing posts with label reduce debt. Show all posts
Showing posts with label reduce debt. Show all posts
Monday, December 29, 2008
Friday, December 5, 2008
Getting a Good Loan Rate
These days getting approved for a loan is hard. Getting approved and getting a good interest rate is even harder. But, it’s not impossible.
If you want to get a good interest rate on a loan, the most important thing to have is a good credit score. Without a solid credit history, you can forget the competitive interest rates. These days, lenders are looking for credit scores of 720 or higher to give loan applicants a good rate. So before you fill out a loan application, check your credit score. That way, you’ll know whether you’re ok to apply for a loan, or if you need to do some work on your score.
For those who need some credit score work, one of the quickest ways to see a boost in your score is to dispute inaccurate items from your credit report. If your credit score is below 720, check your credit report to make sure there are no errors. If you do find a mistake, dispute it with all three credit bureaus to make sure your complete credit history is correct.
To look at all three of your credit reports, click here.
The other thing you’ll need to get a good interest rate is a verifiable income. The days of stated-income loans are long gone. With a stated-income loan, the lender would “take your word for it” so to speak in exchange for a higher interest rate. You got the loan without the trouble of proving your income. The bank got extra money. Everyone was happy. It doesn’t quite work like that. You need to be able to prove your income with recent paystubs, bank statements, and income tax returns. Some self-employed individuals who take large businesses deductions might have trouble even getting approved for a loan, much less get a good interest rate, even with good credit scores.
Finally, you’ll need to reduce your debt. Lenders want to see your debt-to-income ratio below 36%, even after you’ve taken on the new loan. You can calculate your debt-to-income ratio by dividing your total monthly income by your total monthly debt payments.
If you want to get a good interest rate on a loan, the most important thing to have is a good credit score. Without a solid credit history, you can forget the competitive interest rates. These days, lenders are looking for credit scores of 720 or higher to give loan applicants a good rate. So before you fill out a loan application, check your credit score. That way, you’ll know whether you’re ok to apply for a loan, or if you need to do some work on your score.
For those who need some credit score work, one of the quickest ways to see a boost in your score is to dispute inaccurate items from your credit report. If your credit score is below 720, check your credit report to make sure there are no errors. If you do find a mistake, dispute it with all three credit bureaus to make sure your complete credit history is correct.
To look at all three of your credit reports, click here.
The other thing you’ll need to get a good interest rate is a verifiable income. The days of stated-income loans are long gone. With a stated-income loan, the lender would “take your word for it” so to speak in exchange for a higher interest rate. You got the loan without the trouble of proving your income. The bank got extra money. Everyone was happy. It doesn’t quite work like that. You need to be able to prove your income with recent paystubs, bank statements, and income tax returns. Some self-employed individuals who take large businesses deductions might have trouble even getting approved for a loan, much less get a good interest rate, even with good credit scores.
Finally, you’ll need to reduce your debt. Lenders want to see your debt-to-income ratio below 36%, even after you’ve taken on the new loan. You can calculate your debt-to-income ratio by dividing your total monthly income by your total monthly debt payments.
Subscribe to:
Posts (Atom)
