Debt Management Programs and Credit Scores
Financial Myth: Don’t Debt Management Programs Hurt my Credit Score?
When entering our debt management program (DMP), keep repeating to yourself…”I am here to get out of debt.” Nothing worthwhile is ever very easy, including a DMP. For one, our program requires you to close all credit accounts that are on the program. This may even briefly lower the debt balance-to-credit limit ratio portion of your credit score. However, by sticking with the program until your debt is completely paid off, this short drop can pale in comparison to the potential credit score increase debt-free clients see at the end of the program.
One common question is, “I heard its better to file bankruptcy. Is that true?” While bankruptcy may be a valid option for some, it is generally accepted that declaring bankruptcy is the single most damaging event in your credit history. A bankruptcy stays on your credit report for ten years, lowering your credit score. DMPs are designed to last five years or less. Actual participation in the program itself has no affect on your FICO credit score.
Within 30-60 days of entering a Debt Management Program, a notation is generally added to your credit report by your creditors. That notation exists so that while you are in a DMP, no new unsecured credit lines should be issued, such as credit cards or signature loans. This notation is generally removed by the creditors upon completion of the DMP.
Despite the growing number of studies that show that individuals in Debt Management Programs are more likely to eliminate their debt than those in the control groups that do not seek such counseling, there are still a few lenders that misunderstand the credit report notation.
If you’re considering a car or home loan, please call us first to review your budget and analyze your current financial situation. Then, if you run across a lender that will not work with you for a secured loan (home or car) because of the credit notation, let us know. We know there are many lenders that work well with our clients.
If you have any suggestions or stories on how you’ve experienced relief from credit cards and other debt feel free to share in the comment section below. Tips, tricks and other suggestions are always welcome!
1-877-OUT-DEBT (688-3328)
Santa’s Not Coming to Town Quite Yet
I’ve always thought that Thanksgiving gets the short end of the stick when it comes to fall holidays. Christmas seems to invade stores almost as soon as kids are back on the school playgrounds after summer. Maybe that’s why I love Thanksgiving some much. It hasn’t been (and hopefully never will be) commercialized. Hopefully it stays the most home-centered of gatherings so our society.
Still, just because it’s not been co-oped by Madison Avenue doesn’t mean we don’t, as a nation, spend a lot of additional money on the holiday. Thanksgiving generally means extra expenses in: Continue reading “Santa’s Not Coming to Town Quite Yet” »
Teaching Children Finances – Visa’s Financial Football
Visa has created an NFL themed game that teaches children the basics of budgeting and other money management skills. It’s a fun and engaging way for young sports enthusiasts to lead their favorite teams to victory while learning core skills in household finances that will help them achieve financially sound futures. Continue reading “Teaching Children Finances – Visa’s Financial Football” »
Government Debt Bailout? Not so Fast!
There is no Government Debt Bailout when it comes to consumer credit card debt! There are many ads from various Debt Settlement and other companies that mention to take advantage of such debt bailout programs by calling their number.
Remember that it wasn’t too long ago that the Government released its warning about the debt settlement industry…take a look at this past blog post warning of debt settlement: Continue reading “Government Debt Bailout? Not so Fast!” »
A Leading Cause of Bankruptcy: Missing Early Warning Signs
The Association of Consumer Credit Counseling Agencies (AICCCA) released some information concerning the recent increase in non business bankruptcy filings.
The press release discusses the fact that filings have increase by more than double since 2006 to 2009 and that the numbers of consumers seeking assistance from Credit Counseling services have dropped from 20-25 percent down to only 7 to 8 percent. Continue reading “A Leading Cause of Bankruptcy: Missing Early Warning Signs” »
Low Credit Scores Growing Among Consumers – CBS News Segment featuring Todd Christensen
I want to share the story and video that aired last week on KBOI CBS TV. Todd Christensen, Debt Reduction Services Director of Education, shared some excellent thoughts on the current decline in overall consumer credit scores.
Click to view ‘Low Credit Scores Growing’ segment
Here is the text version article which can also be found on www.KBOI2.com.
Debt Settlement Article on MSNBC Red Tape Chronicles
Good Morning,
I read this article this morning and wanted to post a link to it.
Bob Sullivan, a Consumer Rights advocate and whistle blower on scams and internet fraud has written an article on one mans experience with a debt settlement service known as Debt Settlement USA. Continue reading “Debt Settlement Article on MSNBC Red Tape Chronicles” »
Payday Loan Pitfalls
Need fast cash? Can’t wait until payday?
Perhaps that should read; Need fast cash? Can’t wait until payday? Borrow money for only 500% interest. (Payday Loan Fees can run between 390 to over 780% APR depending on the lender) To put it in perspective a Credit Card issuer typically will charge between 10 to 25% APR. Continue reading “Payday Loan Pitfalls” »
Announcement: Career Section Added to Website
I wanted to let readers know that we have added a careers section to our website. The careers section will show current job openings and allows interested individuals the opportunity to apply for a job by filling out an online application and submitting it.
We have also included the ability to copy and past your resume and attach with the application.
We will also be adding a more detailed benefits overview in the near future. Continue reading “Announcement: Career Section Added to Website” »
Credit Report and Your Rights
Have You Pulled Your Credit Report Lately?
Information found on credit reports and that three-digit number called a credit score havebecome such integral decision-factors in our lives. Do you feel as though you are now judged upon your credit report and credit score more than ever?
We have the opportunity—and the right—to see our credit reports and ensure that they are accurate, which is especially important before you apply for a loan. Here are some steps to taking advantage of the FACT Act to monitor your own credit: Continue reading “Credit Report and Your Rights” »