CLS eBook 4 - 8 Tips for Getting Out of Debt and Repairing Your Credit
Ask Yourself. Am I Present? Awaken the Observer and Come Present to Now.
With great gratitude, appreciation and praise we welcome you to the creation space of self love, courage, inspiration and the peace of mind that comes from gently balancing and lowering your brainwaves.
Listening to this ALPHA wave will assist you in creating a transformative meditative state, that will quiet your mind, relieve tension in your body, soothe your spirit, and help you remember how good it feels to be fully present in this beautiful moment of now.
Listen to this ALPHA brainwave as you study the following lesson.
When looking at your financial future, do you only see red? Fear not, for there are ways to turn this red into black. Although you cannot do anything about past mistakes, there are things you can do to improve your current situation.
First, obtain a copy of your credit report from one of the three major credit bureaus: Equifax (800-685-1111), Experian (888-397-3742), and TransUnion (800-888-4213). You can also use free services such as Credit Karma. After obtaining your report, review it carefully, looking for inaccurate and incorrect information such as accounts that do not belong to you, mistakes made by your creditors, as well as companies that have been looking into your report without your permission. Once you find an error on your credit bureau's report, immediately report the mistake to the credit bureau. You will need to request a report from the other two bureaus and repeat the process to make sure all errors are corrected.Second, now that you know what your credit report looks like, you can take some steps going forward to help improve your credit record. First, close accounts you are not using. Remember when you opened up that Pier One account a year ago to get a 10% discount and never used it again? Well, the card still appears active until you close it. So go ahead and close all those accounts that you do not use. Lenders view all accounts as liabilities that you can use at any time, even though you may have not used the card in three or four years. Lenders take the most conservative approach when evaluating the risk of lending you, the customer, credit.
Third, do not maximize all your credit limits. This is a red flag to lenders. If you use 80% or more of the credit you have available, it is a signal that you are stretched and living beyond your means. Another practice you might find helpful is to automate your bills online. It is easy to forget to send in a payment for the phone bill or electric bill. By allowing companies to automatically deduct funds electronically from your bank account, you will ensure the timeliness of all payments.
Fourth, if you do have a credit card balance, pay more than the minimum each month. Credit card companies usually only require a minimum payment of 2% - 3%, which prolongs the painful and long process in paying down your debt. If you only pay the minimum amount required, you will wind up paying interest for years. Try to either double your payment or even pay down an extra $25 or $50 per month. These increased payments will save you hundreds, and perhaps thousands, in interest payments.
Fifth, another way to save on interest payments is to move your balance to a card that offers a lower interest rate. Transfer the balance from your current credit card to a lowest interest rate card. Banks and financial institutions offer promotions on their cards, offering low rates such as 5.9% interest rates for six months. The difference between 18.3% and 5.9% in interest could mean substantial savings to you. But before you switch, be sure to read the offer carefully. Some companies stipulate that if you transfer balances within a 12-month period, the normal interest rate will be applied retroactively.
Sixth, if you have a financial setback and can't pay the full amounts, contact each credit card company separately and negotiate payment terms suitable to your condition. There are credit repair Attorneys who can guide you through the process.
Seven, if you have large debt and are in a position where you can only pay minimums and are not paying any principal, it's time to consider debt negotiation and consolidation. While it is important to be very careful about consulting debt doctors and credit repair agencies, there are many who can help if you take the time to make a couple of phone calls to organizations such as the Better Business Bureau to make sure you are dealing with a reputable company. Debt Consolidation Programs can benefit consumers with a wide range of unsecured debt (generally in thousands of dollars). Unsecured debts include credit card debt, medical bills, service charges, personal loans, signature loans, store credit or charge accounts, gas charge accounts and certain installment loans. They reduce overall monthly debt, save on interest fees, help you to establish a monthly household budget, improve your credit rating by paying creditors in a timely fashion and end collection calls to your house.
Your "fixed monthly consolidated payment" is calculated according to the lowest payment amount accepted by your creditors. The agency you hire will distribute the amount of your "fixed monthly consolidated payment" to each creditor. Most creditors will only reduce or stop your interest fees if their minimum payment is met, but if so, the interest rate reduction with these programs can range from no change to the freezing of interest depending on the creditors policy. This can save you thousands because rates that are usually 12%-24% can get reduced to 10%, 8%, 6% or 0%. Here is an example of how consolidating your credit card debt could be beneficial. Let's say you have $10,000 in outstanding credit card debt and the average annual percentage rate (APR) on that card or cards is 20%. If the outstanding balance remains at $10,000 then over the course of a year you would pay approximately $2000 in interest charges alone.
If you consolidated your credit card debt into a single loan with a lower interest rate or if you did a balance transfer onto a credit card or cards with a low interest rate you would save a significant amount of money. If the new loan or credit card had a 10% APR then you would save roughly $1000 in interest charges over the course of that same year.
The best solution to credit card debt is usually paying off the debt as soon as possible. If you consolidate your credit card debt or do a balance transfer onto a low interest rate credit card, this can reduce your interest expense and help you pay off your debt sooner.
Eight, credit card debt of any sort should be taken seriously. If you have significant credit card debt you may want to seek individual, professional financial counseling.
Credit Card Counseling. If you aren't disciplined enough to create a workable budget and stick to it, have bills that are too big to pay with your current income level, can't work out a repayment plan with your creditors, or can't keep track of mounting bills, consider contacting a credit counseling service. Your creditors may be willing to accept reduced payments if you enter a debt repayment plan with a reputable organization. In these plans, you deposit money each month with the credit counseling service. Your deposits are used to pay your creditors according to a payment schedule developed by the counselor. As part of the repayment plan, you may have to agree not to apply for-or use-any additional credit while you're participating in the program.