Credit Card Debt

The word "credit" is a Latin-based word meaning "trust". The concept of credit has been around for over 3,000 years, but it wasn't until 1730, when furniture was offered through weekly payments, that it was available to the consumer in modern society. Two hundred years later, in 1930, the slogan "buy now, pay later" attracted the attention of both consumers and corporate America.

Next, throughout the 1950s, credit cards were issued to a variety of people who could charge their meals at participating restaurants throughout New York. Soon enough, credit cards came equipped with a magnetic stripe that allowed consumers to charge products to their banking accounts.

Today, there are over 190 million credit card holders throughout the United States, and 81% of households have at least one credit card. This technological innovation has changed the way people spend their money. There are four basic types of credit cards, each with its own positives and negatives.

Bankcards. The most common form of credit card, a revolving loan usually denoted by the licensor Visa or Mastercard. The licensors, such as Visa or Mastercard, allow banks and finance companies to extend credit to anyone in the world, yet still receive payment. Bankcards are more often than not unsecured, however, those with low or no credit may have to back their credit card with physical property, or collateral.

Seller / store cards. Most larger merchants and oil companies will offer this type of credit to a consumer, which is basically an unsecured, revolving credit card that can be used only at the merchant or oil company. JCPenney, Sears, and Exxon Mobil are all popular companies which offer this type of card, which will not usually have a fee but may carry a very high interest rate.

Travel / entertainment cards. Similar to bankcards, however the balance must be paid off in full every month. American Express has long been the leader in this field, however others such as Diner's Club have appeared over the years. These cards are usually more difficult to obtain, as the maximums are usually higher and the borrower must be able to pay the entire balance off every month.

Debt / ATM cards. These cards look similar to credit cards and can be used the same way. However, any purchases made are immediately deducted from the individual's checking account. For the individual looking to stay within his / her means, this is the card, as you are unable to spend more than you have.

Given all these conveniences of the modern credit card, many consumers quickly find themselves in over their head when it comes to personal credit card debt. This is where CuraDebt can help - assisting you in creating a plan to get out from under your personal debt load.

Mortgage Debt

While real estate accounts for only approx. 30% of the average household's total assets, mortgage debt accounts for approx. 80% of the average household's total liabilities. Home mortgage debt has increased every quarter since World War II.† In fact, according to the Federal Reserve, total U.S. household mortgage debt now exceeds $8 trillion.

Underlying reasons for this growth certainly include a rise in the total value of real estate over the years. The last decade has seen unprecedented growth in home values throughout the nation, and with this increase has come higher and higher home mortgage balances as new owners enter the market and existing ones refinance.

Another reason for this growth in mortgage debt could stem from improvements in the efficiency of the residential mortgage lending industry, that include at the very least an ability of the industry to reach out to households with previously unrecognized borrowing capabilities. Information technology has played no small part in these improvements, which have allowed a greater number of people access to mortgage debt.

Today, there are seemingly limitless features and options for the home mortgage borrower, including interest-only loans, variable or fixed interest rates, and full-documentation or stated income verification. The list goes on, but the result is that the home mortgage borrower now has more control than ever over their debt.

Many of today’s homeowners have quickly found themselves in over their heads in debt. This is where a company called CuraDebt can help you - assisting you in creating a plan to get out from under your personal debt load.

Student Loan Debt

Although the cost of higher education is continually rising, the combination of greater tax subsidiaries, higher tax deductibility of student loan interest, and low interest rates have helped to make student loans more affordable than ever before in U.S. history.

There are currently over 16 million students enrolled in higher education, and the number is growing quickly. Just a few years ago, in 2002, American families borrowed over $32 billion in student loans. The demand for new student loans is increasing, as are the options for those who have already graduated. The internet and mass media are littered with offers to refinance and/or consolidate your student debt, and it can be daunting to choose what is right for you.

Although consolidating can be useful in saving you interest costs, keep in mind that you must weigh the interest savings against the fees associated with the consolidation. However, with interest rates below 3%, the savings can be substantial. Be careful though, as borrowers can generally only consolidate their loans once - timing can be everything.

Organizations such as Sallie Mae®, which bills itself as the nation's #1 paying-for-college company, offer all kinds of options to those looking to borrow new loans or consolidate older ones. Formed in 1972 as a government sponsoring entity, Sallie Mae® is now fully private and employs over 10,000 people across the country. Feel free to contact Sallie Mae® to learn about your options in reducing your rates.

Regardless of your interest rate or loan structure, the best way to deal with your student debt is to pay it off as quickly as possible. This is where a company called CuraDebt can help you - assisting you in creating a plan to get out from under your personal debt load.

Auto Loan Debt

Although "direct lending" from banks and finance companies does occur, by far the most prevailing automobile loan program today is "dealership lending". In this situation, the buyer of the vehicle and the dealership enter into a contract for vehicle financing, and the dealership in turn (usually) assigns or sells this contract to a bank or finance company to service the loan. This program is profitable for the dealerships and offers one-stop shopping for buyers.

Clearly, going into the loan relationship the buyer / borrower needs to be aware of the interest rate and payment term. Although it may seem attractive to extend the term of the loan out to 60, 72 or even 84 months and lower the monthly payment, it can catch up to you. The toughest thing about auto loans is that it is very easy for the borrower to become "upside down" in their loan.

A borrower is "upside down" with their loan when the loan balance is higher than the vehicle's value. Although dealerships try to avoid this situation by lending only a % of the vehicle's value up-front, vehicles quickly depreciate (deteriorate in value) with time and use. The best way to avoid this situation is to pay down the debt as quickly as possible.

Regardless of your interest rate or loan structure, the best way to deal with your auto loans are to pay them off as quickly as possible. This is where a company called CuraDebt can help you - assisting you in creating a plan to get out from under your personal debt load.

Mortgage Debt Consolidation

Mortgage debt consolidation can be a smart financial move if you do it right and your financial situation warrants it. On the other hand, it may not be the smart thing to do. You should know that even if it may be the right move for you and your financial situation, you can (easily) make some mistakes and end up in a worse financial situation than before.

Yes, you can still consolidate mortgage debt, or get a mortgage to consolidate debt, even though the number of available lenders seems to be....well that seems to be consolidating too, as this lender and that either goes out of business, or rethinks their strategy altogether. Are we going to have any lenders left??

I was in a Bank of America branch the other day and overheard one of the bank managers explaining to a prospective mortgage refinance customer why Bank of America was in no danger of having the same sort of troubles as IndyMac or any of the other recently (or soon to be) departed. What was his reason for this revelation? He went on to explain that Bank of America was more selective when choosing their mortgage customers, and avoided those with credit problems that would go on to plague so many other lenders.

Upon hearing this bit of salesmanship, my first thought was “If that's the case, and it's worked out so well for you, why the hell did you buy Countrywide?” Seems like good old BofA would stick with what had worked so well in keeping them off the mortgage default express, rather than dumping $2 billion in cash and another $4 billion (at the time) in stock into the sick, California based, mortgage lender, Countrywide. Oh well, maybe the deal could still pay off for Bof A down the road. After all, greater minds than mine concocted it.

If you're looking for mortgage debt consolidation, you're after one of two things, depending upon your interpretation of the term. Either you have a first and a second mortgage and you want to combine them into a single loan, or you have high interest consumer debt, typically of the unsecured variety, and you'd like to roll it into a single, secured loan with a lower aggregate payment that all the little loans that preceded it. Either way, you'll be consolidating multiple loans into one (hence the term consolidation loan).

Here are some pitfalls you'll want to watch out for when getting one of these loans.

Mortgage Debt Consolidation Flag -

Using a small, unheard of mortgage company.
Don't do it. As we've recently seen, merely being a behemoth is no guarantee of safety, either. However, when you're consolidating loans, and anytime you're playing around with your mortgage in general, using a reputable company is of paramount importance. Make sure that their sterling reputation precedes them.

Mortgage Debt Consolidation Flag -

The “Pay Up Front” loan scam.
This loan scam is used for all sorts of personal loans, not just mortgages. It targets those with bad credit or folks with no equity in desperate need of a refinance; basically those debtors with no place else to turn. The legality of absolutely guaranteeing someone a loan never enters into the equation. The scam works like this. The lender claims they'll guarantee you'll be approved for the loan, but they require 2 or three months of payments in advance. Don't write the check!! You'll get no loan, and they'll be on a beach, earning 20% (on your money).

Mortgage Debt Consolidation Flag -

High, hidden, and inflated fees -
You could well be required to pay some fees when getting one of these loans, but in many cases the fees go far beyond reasonable. On many occasions you'll be asked to pay points, but also many other fees, most of which go directly to enriching the lender. If you're getting a loan from a broker, and your credit is decent, don't pay an origination fee.

You may not know this, but the broker is already getting a fee from the lender for your loan. Don't facilitate the broker's double dipping by paying origination fees on your consolidation loan. If your credit's good, they didn't have to do all that much to get you the loan. On the other side of the coin, if your credit is shot, you could reasonably expect to pay a fee, because the broker probably had to work their tail off to get you financed with a decent interest rate.

Don't pay a separate application fee, credit report fee, and appraisal (don't forget to get a copy of the appraisal, they have to provide you one by law) fee. In most cases the application fee will contain the costs for the appraisal and the credit report. If you pay all three, you're just lining the lender's pockets (or sending their kids to Harvard). Another trick used by some lenders is marking up the fees that they're asking you to pay. You should pay fees such as wire transfer fees or title fees, but you should not allow the lender or broker to mark them up.

Mortgage Debt Consolidation Flag -

The Over Eager Lender –
If your lender seems too over the top, especially of you have bad credit, take a step back and look at all the details one more time. You may just have the employee of the year at your disposal, but you could also be headed for trouble. This type of lender or broker can often be leading you into a trap known as…

Mortgage Debt Consolidation Flag -

The Old Bait and Switch –
Mortgage lenders aren’t the only businesses to be guilty of this little scheme. One thing that could tip you off that your lender may be a bit sleazy is if they treat your loan papers as a “living, breathing document”. That’s to say that the loan you negotiated may not be the one they set in front of you on the closing table. Even though you agreed to certain terms verbally, or got an offer sheet, it is still incumbent upon you to be sure the loan documents you’re signing reflect the same loan you agreed to.
If you have really crunched the numbers (all of them), feel that a mortgage debt consolidation is the right financial move, and are comfortable putting your house on the line, than go for it. If you’re just consolidating more than one mortgage into a single mortgage, you house was already collateral any way. If you’re consolidating high interest, unsecured debt, think it through a few times before committing your house full of family memories (and possibly substantial equity) as collateral for a dent consolidation loan.

Debt Consolidation

The term debt consolidation refers to the practice of taking out one loan in order to payoff others. In most cases, the borrower will be able to combine the consolidation with a restructuring of the debt, including a reduction in the balance, reduction of interest rates, and/or extended terms.

Instead of trying to balance multiple creditors, the borrower has one payment to make. The payment amount is determined by what the borrower can afford, so that he or she can move forward toward becoming debt free, rather than falling into further debt.

Debt Settlement

The term debt settlement refers to the practice of paying off all debts at a discount. It is a relatively quick and effective way to reduce your credit card debt, and is usually combined with a debt consolidation program in which a new loan is borrowed to fund the payoff of the existing debt.

The advantages of debt settlement programs include:

* Your total outstanding balance can be reduced by as much as 40% to 60%.
* Possible to convince your creditors to reduce the rate of interest in the negotiations.
* Remove any negative “points” from your credit report and improve your credit status.
* Reduce collection calls or prevent them altogether.
* Improve your credit score by making timely payments.

CreditCard2 offers debt settlement programs which can effectively settle your credit card debts. The credit card debt settlement option is widely used by many entrepreneurs as well as salaried individuals who have benefited from the program.

DebtFree Advantage

he average American's personal debt is higher than ever before. CuraDebt was created in order to begin to reverse this rising tide of debt and help individual Americans eliminate their debt and begin building wealth. There is an end in sight. It simply requires focus, discipline, and the right tools to help you get there.

The benefits of being debt free are countless. Once you have taken control of your life by reducing your debt, you will qualify for the lowest interest rates and best terms on any debt you incur in the future, as a result you will have more disposable income to invest, and on and on.

CuraDebt is based in San Diego, CA, has some of the best people in the business and has been around for many years. Our counselors are very professional and everything is kept strictly confidential.

Types of Credit

There are four major types of credit, each with its own unique qualities. It is worth becoming familiar with these types, as chances are you will encounter each at some point during your lifetime.

Secured, closed-end. The term "secured" is used when there is physical property, or collateral, backing the loan, and "closed-end" means that the loan carries specific payments and lasts a specific period of time. Examples of this type of credit would be a home mortgage or auto loan. If the borrower were unable make the payments on this debt, the bank or lender would have the right to repossess the house or the auto backing the loan.

Secured, open-end. Similar to a credit card, this type of credit is revolving; however, it is also secured with physical property such a house. The most common example would be a home-equity credit line. Usually, only payments of interest are due on this loan, and the borrower chooses when to make payments on the principal balance of the loan.

Unsecured, open-end. As discussed above, "unsecured" means that there is no physical collateral backing the loan. In this type of credit, the bank or lenders feel that the borrower's credit-worthiness is sufficient to grant him or her a loan without collateral. The common example of this type of loan is a credit card. In exchange for the lender's lack of collateral or asset backing the loan, the lender will usually charge a higher interest rate, which is why credit card interest rates are usually much higher than home mortgages or auto loans.
Unsecured, closed-end. Probably the most uncommon of the four, this type of credit is extended without assets or collateral backing the loan, however, specific payments of principal and interest must be made and the loan lasts a specific period of time, unlike credit cards.

Credit Reporting

A credit score is an estimate of your creditworthiness as determined by a financial model, and is typically calculated based on the contents of your credit history, or report. There are many systems out there, but by far the most popular is the FICO score, utilized by all three major credit reporting bureaus. Lenders purchase this score, along with your credit report, and use it to determine the risk of you defaulting on your future loans.

Lenders are no longer looking to a credit score to help them gauge whether or not they should extend you credit, today, it is much more of a question of on what terms. Your credit score affects not only the yes or no decision on the loan or credit card, but also the interest rate and terms. The lower the score, the higher perceived risk, and the higher the interest rate.

History of Credit Reporting

Years ago, the local shopkeeper or small town banker's decision on whether to lend you credit was based on your reputation and the word around town. As the world has grown and financial institutions have evolved, more complex statistical rating systems have had to be developed. The finance world is dominated by large corporations, the owners of whom you will usually never come into contact with.

There are positives and negatives to this financial system evolution for the consumer. On the plus side, the market has become very efficient, i) forcing financial institutions to compete for your business and ii) granting you the power of choice. However, your entire credit history has been systematically reduced to a mathematical formula, the variables of which you have had no approval or input on. This is the key reason why it is crucial that the modern consumer be fully aware of the contents of his or her credit report, so that any misinformation can be refuted and repaired.

The Big Three

Credit bureaus, or credit reporting agencies, collect detailed personal financial information on individuals from lending institutions across the country. This massive amount of information, approximately two billion pieces of data per month, is then categorized and filtered through mathematical algorithms to determine individual credit scores. The resulting credit scores, along with all other data in the individual's credit history, are sold on an as-requested basis to financial institutions, employers, landlords and others for a fee. Many of these groups have such high volumes that each individual's credit report and score may cost only a few dollars.

Although more exist, the major three credit reporting agencies in the U.S. are Experian, based in Costa Mesa, CA; Equifax, based in Atlanta, GA; and TransUnion, based in Chicago, IL. These entities are all for-profit organizations and have no government affiliation. Generally speaking, these agencies do not share information with each other, so in reality, you have as many credit histories as there are reporting agencies.

Credit Scoring

Similar to SAT scores, your FICO credit score can range from a low of 300 to a high of 850, although the overwhelming majority of Americans fall into the category of 550 to 750. It is based on a variety of factors, which include:

Payment History (35%)
- How well you pay your bills;
Capacity (30%)
- How much credit you have vs. how much you are using;
Length of credit (15%)
- How long you have had your credit relationships
Type of credit (10%)
- The quality of lenders and the percentage breakdown between credit and installment debt
Search and acquisition of new credit (10%)
- How recently (and how often) you have inquired about opening new credit accounts

Secret to Your Credit Score

Your credit score is important because it affects not just whether or not you have the ability to obtain a mortgage, credit card or other loan, but also how much you can borrow and at what rate and terms. Your credit score may also help determine other things, such as whether or not you can rent an apartment or get a cell phone.
Although over time your credit will improve, it takes approximately 24 months to restore credit from only one late payment.

Consumer Credit Counseling

Consumer Credit Counseling ("CCC") is an industry that sprung up in the early 1980's when banking laws changed and it became far easier for the average consumer to accumulate credit card debt. Larger and larger balances were amassed, and soon many individuals found themselves unable to meet minimum monthly payments.

At that time, with no other option, many consumers were forced to file for personal bankruptcy. Seeing their loans defaulted, the banks began funding organizations to help these consumers avoid filing for bankruptcy. The organizations, called consumer credit counseling ("CCC") companies, served essentially as outside collection agencies for the banks.

Once a consumer is enrolled in the program, the CCC contacts all of the individuals' debtors and notifies them of the individual's participation in the program. The consumer then begins paying one lump sum to the credit counseling company, rather than many individual payments to the credit card companies.

Improve Your Credit

Paying your bills on time and never missing payments will undoubtedly lower your score over time. Also, staying out of bankruptcy and avoiding tax liens, as well as lowering the ratio of outstanding debt to available credit. If your balances are at or near their maximums, the lending community sees you as a higher risk of default.

Specifically, the factors that influence your credit score are listed below:

Improve Your Credit Score

Payment History (35%)
Make your payments and make them on time. Many creditors allow a grace period, but the goal here is to make the payments on time, even if it is only the minimum payment. Ideally, you will be able to save a cushion of at least one month's payments, in case you run into cash flow trouble. It is better to have the cash available if you need it, then to run into an issue where you are late.

Capacity (30%)
The optimum shape for level of debt outstanding vs. total available is approx. 20-30%. The best way to improve this area of the credit score is by paying down debt, focusing on those accounts with balances closest to being maxed out. Avoid cutting up or canceling cards, as this will reduce your overall available credit.

Length of credit (15%)
Avoid canceling credit cards, unless they are charging high fees. The longer you have had relationships with lenders, the more this area will help your credit score. Generally speaking, it is a good idea to have had at least one credit card for over two years. If you must cancel cards, try to cancel the newest ones first.

Type of credit (10%)
This is a difficult factor to improve on. Part of this factor involves the credit bureaus' perception of various lenders, which can be difficult to gauge. Generally speaking, sub-prime lenders, or those lenders which it might be easier to obtain a loan from, but charge excessive fees or interest rates, are looked down upon by the credit bureaus. Also playing a factor is your composition of credit debt vs. other types of debt such as installment, but the ratios are different for each credit bureau.

Search and acquisition of new credit (10%)
This is an interesting one. At first glance, it may seem as if the credit bureaus are penalizing you for shopping around for the best rate and terms of a mortgage or credit card. However, in their eyes, all inquiries (or applications for credit) within a 15-day window are considered one inquiry. Thus, the idea is to prepare your preferred list of lenders and apply to all quickly, rather than letting the process drag out. It also may go without saying that you should avoid applying for every credit card or loan offer that comes in the mail.

The three credit bureaus, Experian, Trans Union, and Equifax, have the seemingly overwhelming task of tracking all of these factors for each and every American with credit. Unfortunately, it is inevitable that mistakes will be made, and it these mistakes will usually push your score lower than it should be. It is your responsibility to be vigilant with your credit, and check for errors and fraud as often as possible.

Improve credit rating after Credit Card Debt Settlement

Maintaining a positive credit status means availing the facilities and advantages offered by financial institutions. A good track record helps you to do that. Certain points will help you maintain a good credit record.

* Paying bills on time
If you are irregular in paying bills you loose your credit score. Therefore be very prompt in paying bills on time which will eventually improve your credit score. Start Now...!
* Keep low balance
keep low balance on your credit cards, high balance will pull down your credit score significantly. Apply for Free Settlement!!
* Use credit card wisely
If you have a credit card and if you make all payments on time it will raise your credit score rather than having no credit card. A person who holds no credit card is more risky to the lender than a person who holds and makes timely payments.