If you are looking into different credit solutions, how can you choose the best one? A key first step is to define your goals and what specific credit solutions you are looking for. Whether you need debt help, credit related loans, or help with your credit report, Bills.com can help you evaluate all possible credit solutions and help you find the best provider for your needs.
Which of the various credit solutions available is best for you will depend on what you are trying to achieve, as well as on your current financial health. Are you a homeowner? Then perhaps the best of the available credit solutions will involve using the equity in your home. Is it credit card debt that is overwhelming you? If so, you will need to decide if your goal is to get out of debt at the fastest speed… or to lower the amount you are paying each month in monthly payments. You will likely want to examine both debt settlement programs as well as debt consolidation programs. Both of these credit solutions have pluses and minuses. Depending on what you wish to achieve, one credit solution approach will be better for you than another.
Types of credit solutions
Generally, credit is organized into three major buckets:
1) Revolving credit: where a consumer borrows money from a lender and pays it back at the end or makes partial monthly payments (e.g. Visa and MasterCard).
2) Charge credit: where the lender provides the consumer with a loan under the presumption that it is going to be paid in full at the end of the month (American Express).
3) Installment credit: occurs when the consumer agrees to finance a debt with monthly payments over a predetermined period of time (e.g. mortgage).
A good credit score
The higher your credit score, the better; however, there is no real industry standard. Credit scores range from 350-850. Each creditor/lender judges your credit score differently and takes other factors into consideration when determining your eligibility and/or risk. Typically, anything above 690 is considered a great score. Below a 620 is frequently referred to as "sub-prime."
The need for credit counseling
There is no established debt amount or situation that dictates the need for credit counseling. Whenever you feel overwhelmed by debt, regardless of the amount, and need assistant with your credit debt, credit counseling can help you steer clear of huge financial troubles.
Credit Counseling’s influence on Credit Rating
The existing condition of your credit report will influence how credit counseling will affect your credit; however, there is no hard and fast rule regarding credit counseling and your credit. Most creditors will report your usage of a credit counselor while other may not; and there’s no predicting how future creditors will interpret it. Many lenders perceive credit counseling as a consumer “work-out” program. Credit counseling will NOT impact your FICO score.
Unsecured credit cards for bad credit have higher interest rates:
When creditors provide unsecured credit to those individuals with bad credit, the credit issuers face higher financial risks. So, to protect themselves, creditors set higher interest rates and fees for those with bad credit.
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About the Author:Justin has more than 5 years experience as a financial adviser at bills.com, his key areas are loan consolidation, debt relief, mortgages etc.
Article Source: ArticlesBase.com - Your Guide to Credit Solutions
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