8 Helpful Tips For Credit Consolidation

1. Get Educated
There are various types of credit card consolidation, and the credibility of companies varies drastically. The decision to consolidate your debt will have very significant consequences and all cases affect your credit. Educate yourself and do your homework in advance.

2. Get References
A good company should be able to provide you with the history of the company’s success as well as positive references from satisfied clients. Check
with the Better Business Bureau and the Department of Consumer Protection before choosing any company to handle debt on your behalf.

3. Review The Numbers
Check the plan the company gives you carefully to be sure that all of the numbers add up. Review all monthly payments and any associated fees over
the length of the plan to be certain the totals are correct. Do NOT start a plan that simply does not look right. Do NOT be afraid to ask questions and get answers in advance.

4. Be Sure To Include All Your Accounts
Make sure you know exactly which accounts are not covered. Many credit card companies or collectors will not participate in certain plans. As a result the
creditors of accounts that are not included can send you to collections, or pursue other legal action against you. This often means additional fees, interest and costs of collections that you will have to pay. Be Aware. Consolidation can NOT help with student loans, tax debt, foreclosures, repossessions, or any debt where a lawsuit or arbitration has already begun. Credit consolidators are also often unsuccessful with medical bills, legal bills, and cosigner

5. Consumer Beware!
Stay clear of companies that claim to be able to settle your debt at a later date but require the money immediately. NEVER use these companies. These are often the worst scams in an already dangerous industry. Be aware and very wary of internet companies. Don’t depend on a company you can’t meet in person.

6. Verify Your Budget
All plans depend on having enough surplus income to pay all your regular monthly bills and still leave extra. Be sure that the numbers in your monthly expense budget make sense and take into account one-time or “surprise” expenses. Leave a “cushion” of at least $100 – $200 extra each month – You will need it.

7. Payment Methods
Be careful of direct deductions from your bank account. All direct deductions give 3rd party direct access to your family’s checking account. This direct access by others should be avoided whenever possible.

8. Do Your Own Checking
Finally, check on your own that the arrangements have been agreed to by each individual creditor. Be sure ALL accounts are included. No amount of hard work and payments can protect you from a plan that is flawed at the start. Nothing is sadder than making months or even years of payments and then having a plan fail, often through no fault of your own.

How to Enhance Your Credit Score

So what’s the answer to those of us who ask: How do I really enhance my credit score today if simply paying on time isn’t the best approach?

Reducing Debt Load

The best means to enhancing your credit score is reducing utilization and a healthy debt-to-income ratio. High utilization indicates a poor debt-to-income ratio and no amount of perfectly timed payments will overcome this element to avoid a tanking credit score or an overwhelming burden on your day-to-day financial life.

Why There’s No Better Savior Than Debt Reduction

While it’s important for you to pay your bills on time (since our FICO score is determined in part by our payment history) focusing solely on making payments on time as an exclusive strategy to boost your score isn’t wise.

Debt reduction is the answer. An unhealthy debt-to-income ratio is essential to a solid credit score and financial health. Too much debt makes it impossible to obtain good lending rates or a balanced monthly budget.

However, simply making payments on a $30k credit card balance is a bit easier said than done. In many cases, credit cards come with high interest rates, making it virtually impossible in some instances to pay off the principal in an acceptable amount of time.

Many of us may think about reaching into our 401k savings to pay off the debt. After all, it would give us an immediate clean slate, right?

This is a drastic and often improper alternative made by individuals and families in trouble. There are often better options and none should be overlooked or disregarded without experienced legal advice on better avenues for debt relief.

Why You Should Consider All Avenues For Debt Reduction And High Credit Scores

There are various proven legal options for debt reduction, including debt settlement and debt relief. And, an experienced debt relief attorney will know the best option under your specific circumstances, including Chapter 7 and Chapter 13 bankruptcy.

In our society, bankruptcy is often regarded as a last resort, a decision that will crush your creditworthiness in perpetuity. But this simply isn’t true.

Paradoxically, your FICO scores may in fact go up post-bankruptcy because of the reduction in your utilization. Credit card offers and car loans are actually available within weeks or months of a bankruptcy discharge and getting approved for a mortgage no longer takes years.

Bankruptcy is an important legal decision that is used by many people, but only with the benefit of experienced legal counsel. In certain circumstances, it is the appropriate method to a lasting financial future within increased credit scores and a healthy reduction in your overall household debt burden-all while preserving your savings and retirement portfolios that took decades of work to build and grow.

In today’s economy, everyone needs to take the time to become educated about their particular financial circumstances with the help of an experienced legal professional.

To learn the best options for you and your family, meet with a specialized debt relief attorney.

The Law Offices of Neil Crane, LLC, is a debt relief agency with 30+ years of experience helping individuals, families, and businesses find lasting solutions to their credit card debt and other loan obligations.

Can I Sue Debt Collectors?

Consumers can sue creditors who have violated consumer protection and fair debt collection laws. Unlike other attorneys, we are not afraid to file suit against creditors who violate your legal rights.

Every case is unique, but if you are being harassed or abused by debt collectors, we always offer a free consultation to properly evaluate your case and help you make informed decisions about all of your best options.

With our help, you may stand to gain the following:

  • Financial compensation in statutory damages
  • An immediate halt to all contact with all creditors/collectors or any harassing parties
  • A full examination of the validity and true ownership of the debt, and the actual correct amount of any obligation
  • Additional compensation for any actual damages you incur because of creditor/collector harassment
  • Creditor/collector will be ordered to pay your attorney fees if you obtain a favorable ruling.


What Debt Collectors Can I Sue?

Under the right circumstances, we can sue any debt collector/creditor that violates the law to harass or abuse you in the following ways:

  • Verbal harassment and threats
  • Deceptive tactics and statements
  • Contacting your family, neighbors, friends or employers and discussing your debt or anything pertaining to collections directly
  • Presenting you with false information
  • Calling you before 8 a.m. or after 9 p.m.
  • Seeking to communicate with you despite knowing that you are represented in the matter by an attorney

We handle legal matters with banks, mortgage lenders, auto loan financiers, medical providers, insurance companies, credit card companies, debt collection agencies and others. Our knowledgeable and skilled lawyers can sue harassing debt collectors in New Haven, throughout Connecticut and anywhere else in the country.

We represent Connecticut consumers, and we will uphold your rights against creditors and debt collectors of all types. Regardless of the amount of debt you carry, we can help you.

We can help you save your home, stop foreclosure, stop creditor harassment and obtain debt relief for a brighter future.

FICO Score Calculations: Yesterday And Today

For many of us, maintaining a good credit score is a top priority in life. We may overlook getting that oil change or forget the annual physical at the doctor’s office, but we do everything necessary to pay our credit card bills on time, believing that on-time payments will maintain a high credit score.

In the past, this may have been true. Today-it is not the case, perfect payments don’t mean perfect credit scores. Here’s why.

How are Credit Scores calculated?

Your credit score, or FICO score, is essentially a calculation used by lenders to determine your eligibility for a loan, how much you can borrow and the corresponding interest rate.

Previously, your credit score was a mysterious, hidden computation that was primarily based on your payment history. Today, the breakdown of your score is a more clear-cut computation based on numerous important factors.

The five different factors used to calculate a score range of 300-850 need to be carefully examined and understood:

  1. Payment history. This portion focuses on whether or not payments were made on time. It accounts for 35 percent of the score.
  2. Amounts owed.This portion examines outstanding credit accounts and how much is owed on each obligation. This makes up 30 percent of the score. It’s called utilization and it’s now essential to maintaining a high credit score.
  3. Length of credit history.This portion reviews how long the applicant has used credit. Generally, a longer credit history leads to a higher FICO score. This makes up 15 percent of the score.
  4. Credit mix.This portion looks at the different types of credit given (e.g. retail store accounts, auto loans, mortgage loans). This makes up 10 percent of the score.
  5. New credit.This portion reviews how many accounts were recently opened, triggering a potential credit risk if a borrower opens “too many” lines of credit. This makes up 10 percent of the score.

All of these are important, but number 2 above-also referred to as credit utilization-is the newest and most important factor in your credit score and your daily life. Here’s why.

 Perfect Payers Don’t Have Perfect Scores

In the past, if you had a steady income and always paid your bills on time, you were rewarded with a higher credit score-even if you had an unhealthy debt burden.

Not so today. Outstanding debt is now a huge part in a FICO calculation-and that is why many of today’s so-called “perfect payers” are ending up with diminishing FICO scores. These utilization rates are the central component to rewarding perfect payers with perfect scores.