Credit Solutions - Knowing When And If You Need One

By Author: Ivan Cuxeva Jr
Total Articles: 782
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One horrible reality in a fast paced economic and social scenario is having debts. Not one person in this world is exempted from having some form of debt. A startling number of consumers in the United States are in debt and with the economy at an all time low, this statistic will only shoot up in the coming months and years. Finding yourself buried in debt can be a frightening and alarming situation. Not to mention unhealthy for all the worry and despair one will experience.

That is why you need to find yourself some form of credit solution to take care of your financial burden. If you find yourself in financial trouble, you need to look into the various types of credit solutions available in the market today. The question now is how will you choose the best type of credit solution? One major determining factor is to identify your goals and establish the specific credit solution that will work best for you and your current lifestyle.

Which among the different credit solutions available in the market today is best for you will rely heavily on what you are trying to accomplish, including your present financial ...
... health. Do you own a house? Then most probably, the most appropriate credit solution for you will involve using home's equity. Are you having trouble managing your credit card? Do you find yourself overwhelmed with your outstanding balance? Then you might have to decide if your goal is to settle your debt as fast as you can or to lower your monthly payments, slowly inching your way towards paying off the whole outstanding balance. In which case, you may want to evaluate both debt settlement and debt consolidation programs - both of which are considered credit solutions. Depending on what your goals and needs are, one of these credit solutions is bound to be the better solution for you than the other.

It is better to understand the different types of credit solutions available in the market today. In general, credit is categorized into three main buckets: First is revolving credit, wherein a person applies for a credit from an established lender and agrees to pay the whole credit at the end of the month or pay in monthly installments. Second is charge credit, which is pretty much the same as a revolving credit except that the lender expects the loaner to pay for the whole amount at the end of the month and installment credit wherein the consumer agrees to pay off debt in monthly installments over a prearranged time frame as in the case of home mortgages.

In line with this, a consumer may now choose which credit solution is best considering his financial status. One form of credit solution is debt consolidation wherein multiple loans are consolidated into one single loan amount which has a far lower monthly payment fee but with an extended payment period. This works best if the consumer wishes to protect his credit score. Another form of credit solution is debt settlement which is a tad bit unhealthy, financially. The reason is that debt settlement institutions hold your money against creditors on your behalf and will try to persuade creditors to agree in settling your debt at 40-50% of the total balance. In which case, monthly interest rates and fees continue to accrue on your account until a foreclosure or charge off is achieved. This will definitely reflect badly on your credit score and your ability to apply for credit in the future - which is still considered another form of credit solution.

Of great importance is the fact that you need to be smart enough to understand when you are way over your head with debt and look for help before you run out of time. Ensure that you study any company that you are taking into consideration, and maybe even verify with the Better Business Bureau for grievances or concerns. Be ready to keep settling your debts with our creditors until a substantial conformity is reached. Remember, one perfect credit solution is to not have gargantuan credit at all.