Improving Credit Rating With Debt Consolidation Loan

Improving Credit Rating With Debt Consolidation Loan 

If you are experiencing debt problems, and find that your credit rating is suffering, this may affect your ability to borrow money in the long term, and it is important to improve the rating as you conquer your debt.

Debt consolidation loans are a common solution to tackling out of control debt. If you find the right rates, a loan of this type can offer lower monthly repayments, and sometimes lower interest rates too. Using new credit, all of your existing debt is consolidated into one repayment to a single lender.

A debt consolidation loan is not always the best solution, but not many people realize that when the time is right it is even possible to improve your credit rating with consolidation.

All Depends What You Do After Consolidation

Debt consolidation loans do not, in and of themselves, affect credit rating. In some cases they may even cause a small dip in the short term, as you will be borrowing more money. If used wisely however, and paid off with no problems, debt consolidation helps you to avoid the bad credit you are currently accumulating, and gain stronger credit through the action of repayment.

It all depends what you do after consolidation, and whether you manage your payments and repay your debt.

Stop Missed & Late Payments 

One of the primary reasons why people tend to seek a debt consolidation loan, is due to the struggles of existing debts which come from many lenders. In many cases payments are being missed, late payments made, and charges accumulating; all of which negatively effect your credit rating.

Debt consolidation loans can make repayments more manageable, often reducing the amount you need to pay each month. Payments can be scheduled in a way that suits you better than before, helping you to regain control of your finances. Getting back on top of repayments, and reducing fees and charges, will help to stop the negative impact of your debt on your credit rating.

Positive Credit Impact With Consolidation 

With your finances under control, and your debt well managed under the consolidation loan, you should be able to begin to actually improve your credit rating. If you are able to make repayments to the schedule that you agree upon and pay off the loan, then you will show responsibility as a borrower. This is a huge factor in your credit rating.

If you manage to pay off the debt consolidation loan, and gain no new debt, then your credit rating will be very strong. Less debt equals stringer credit, so repayment is always the goal. Use a consolidation loan to move forward and make repayments, not just to move debt around, and your credit rating will be improved.

Is A Debt Agreement Better Than Bankruptcy?

Is A Debt Agreement Better Than Bankruptcy?

When debt becomes severe a serious debt solution may be the only way out. Many people believe that bankruptcy is the only option in such cases, but there are other alternatives that should be considered.

Debt agreements are considered acts of bankruptcy under the Bankruptcy Act 1966, but do not have as far reaching implications as bankruptcy itself, which in most cases has the most negative impact on credit rating.

Here is a quick overview of the consequences of both a debt agreement and bankruptcy:

Bankruptcy

Remains on credit file for a seven years. Recorded on National Personal Insolvency Index.

In some cases, may not be required to pay back any of debts to creditors. You do not need to seek approval from creditors to file for bankruptcy.

May lose some of your assets, and experience difficulty traveling. Obligatory yearly assessments of income.

No requirements or limitations on income, debt, or assets, making bankruptcy a more readily available option in some cases.

Debt Agreement

Remains on credit file for a minimum of 5 years, or more if the agreement last longer. Recorded on the National Personal Insolvency Index.

Provides financial relief in the form of frozen interest rates and affordable repayments. Legal action ceases on unsecured debts. You still pay back some of what you owe.

You keep all of your assets, and do not experience some of the other negatives of bankruptcy, such as travel restrictions and yearly assessments of income.

Debt agreements have restrictions such as income and minimum and maximum debt amounts, and so are not always an available option. In the case of ineligibility bankruptcy may be the viable option.

Which Is The Better Option?

It all depends on your specific situation, which is why debt consultations are a wise idea if you are experiencing debt problems. Generally speaking a debt agreement is preferable, if the option is open to you and you meet the requirements. You are still required to pay back some of the debt you owe, but the consequences are less extensive than bankruptcy.

Tips on How to Choose Debt Settlement Companies

Sitting over your financial crisis and not doing anything about mounting debts and unpaid bills can only take you deeper into the problem. Therefore, the moment you begin to feel the heat of the problem, you must approach a professional debt negotiator like Free from debt to help you out of the problem and give you relief from bad credit as quickly as possible. No matter what type of debts you have; credit cards, mortgage, personal loans or multiple loans, Freedom from debt can help you with credit card debt settlement. They have an interactive website and you can get in touch with the company via the internet and then fix up an appointment for a personal interaction. 

Key Factors to Consider

One of your major purposes for hiring debt negotiators is to find financial relief, so your best option is to hire Free from debt, because it is a reputed debt collection agency in Melbourne that will determine solutions keeping only your interest in mind. A company like this is very essential when you are facing debts. You need to make sure that the company is accredited and recognized in the industry and Free from debt is one such agency. Opt for a company that offers multiple solutions so that you have the freedom to choose the one that suits you best.  

Questions You Must Ask Yourself

Whenever it comes to financial issues, it is important to tread cautiously. Here are some questions you must ask yourself before you hire debt negotiators. Should I be more bothered about the service charges or the quality of services? How much help will I need from my debt negotiator? What financial details should I share with Free from debt? How much freedom would I want to give the company regarding my finances? How fast do I want my credit card settlement to take place?

Important Things You Must Discuss With Debt Negotiators

When it comes to major expenses such as buying a property, paying for education, medical treatment or purchase of jewellery, car or major electronic items, most people prefer to shop using credit cards or take a loan. In either case you will be spending money that you don’t have in your possession. While both these solutions seem to be the most appropriate, yet there are chances that you may get carried away spending more than you can actually afford. This is one of the reasons why most people end up with credit card debt in Australia. However, just like how banks help you with loans for your expenses, similarly Freedom from debt can get you out of bad debt. 

Importance of Sharing Financial Details

Freedom from debt is a renowned company that offers solutions to customers who are facing financial crisis due to huge amount of credit and unpaid bills. One thumb rule that you must follow when you hire debt negotiators is; to share important details of your finances without hiding anything. This will help the bad credit personal loan lenders to determine an appropriate solution to your financial problem. However, you must discuss the details of your finances only when you make the decision to hire the company to assist you with your debts. 

4 Important Financial Facts You Must Share

If you want debt negotiators to give you the best possible advice and solution to your problem, then here are four important facts about your current finances that you must share with Freedom from debt. The first fact you must state is the type of debts you are currently facing. Secondly, you must clearly tell them the amount of cash you have in your possession. Thirdly, discuss your financial situation which should include your other expenses besides the loan. And finally, inform the company the score of your credit card debt in Australia.

Part IX Debt Agreement in Australia

Debt Negotiators is an experienced firm that has years of industry experience in dealing with debts. They have helped thousands of people come out the debt trap. Debt free consolidation is a debtor’s dream. The team at debt negotiators makes it easy. Debt agreements are one area of specialization of the firm.

Effects of debt agreements
Debt agreements are an alternative to filing a bankruptcy. The action is recorded in the National Personal Insolvency Index which is an electronic register that can be viewed by public upon payment of a fee. Further, details of the debt agreement may also appear on a record held by an organization reporting credit. This detail is maintained for seven years.

Part IX debt agreement
A debt agreement is an agreement between the debtor and creditor and it falls under Part IX of the Bankruptcy Act of 1996. Under the Part IX debt agreement, the creditors agree to accept a certain sum of money which the debtor can afford. Proposing a debt agreement is a serious decision and one has to consider the pros and cons before deciding to go ahead with a debt agreement.

There are several things to consider before getting a debt agreement. This includes requesting the creditors for more time, negotiating another payment plan or requesting the creditors to accept a smaller amount to settle the debts. It is not wise to contact the creditors directly. Therefore the help given by firms like Debt Negotiators cannot be overlooked.

Secured and unsecured debt consolidation loans

It is not very difficult to find a firm that promises help at the time of debt accumulation. However consistent and professional help that promises practical and affordable debt solutions is essential. There are many debt consolidation companies in Australia. Debt negotiators are renowned for their consultants who offer reliable help that gives one the freedom from heavy debts.

Unsecured loans
There are two types of debt consolidation loans that the firm provides. The unsecured loan is one in which the debtor’s assets is not used as collateral for the loan. Any failure to pay the loan amount can result in initialization of collection procedures. This type of loan is given on the basis of the credit score. A low score can result in failure to obtain the loan.

The loan is approved in a short span of time and there is no risk of losing one’s assets. The interest rate and period of payment is fixed. The loan calculates only the simple interest unlike the compound interest that is calculated while paying off credit card debts. However this loan is difficult to obtain and the interest costs incurred with the loan is taxable.

Secured loans
Secured loan is one in which the debtor’s assets is used as collateral for the loan. Any default on the loan can result in loss of assets to the lender. This type of loan has a lower interest rate and the interest is tax deductible. A bad credit is not an obstacle to obtain a secured personal loan. However the fees and additional costs are high and cash is not obtained as fast as the unsecured loans.

Three essential ways to consolidate debts

It is not uncommon for people to fall into the debt trap. Unmanageable debt can put one in an embarrassing situation. Figures reveal that Australia’s borrowing is at an all time high as compared to the last five years. People are desperately on the lookout for debt consolidation help. Debt negotiators in Australia provide expert assistance to overcome credit problems.

Debt consolidation loans
Debt Negotiators can help in any desperate financial difficulty. This includes unmanageable debt, loan repayments, bad credit history, mortgage credit card debts in Australia and others. They provide different options to consolidate debts. One of the most common is debt consolidation loans. These loans considerably help to reduce monthly repayments.

Home equity loans
Home equity loans allow the debtor to take a debt consolidation loan against the value of his home. Most of these loans have fixed terms and conditions. Their interest rates and amounts are all fixed. There is a substantial decrease in the interest rates.

Credit card balance transfers
Another way of consolidating debt is by using credit card balance transfers. This consolidates all the debts onto a low or no interest credit card. Once a balance transfer is initiated, a transfer fee has to be paid. For a certain period of time after this, no interest accumulates on the balance amount that has to be paid.
However once the balance transfer period ends, the interest on the card reverts back to the original amount. Therefore one has to have a good financial balance during this period to avoid getting to a new debt after the balance transfer period ends.