Debt Consolidation- a basic overview

The term "Debt Consolidation" just rocks today's finance industry. As per statistical details debt consolidation happens to be a $3 trillion industry in US today.

To put it in simple terms, debt consolidation is a process by which every single debt of an individual is consolidated in to one and its easy repayment is ensured. Debt consolidation companies handle debt obligation of individuals, negotiate with their creditors, and smoothen out the repayment process in consideration of a certain amount of fee. Availing debt consolidation services may ensure a great relief to you and your family if you've been suffering from debt burdens. It would relieve you entirely of harassing creditor calls and ensure your mental peace at least temporarily.

However, as there is pros and cons associated with everything, so is with debt consolidation. Some debt consolidation companies would rather advice you to avail a loan of some sort and pay of your debts. Its not at all a repayment of debt but rather a transfer of debt from one source to another. This process is never recommended and it is always better if you go for self repayment plans or debt settlement plans. These would rather have some amount of your debt waived off and ensure smooth repayment of your debt.


Bankruptcy happens to be another badly recommended and yet much popular methods to waive off your debts. Most debt ridden individuals prefer to go for filing bankruptcy as it waives off their debts altogether without they having to pay anything. What they don't realize is that filing bankruptcy leaves a permanent mark in their profile that restricts them from availing further credit, cash advance or sometimes even job for a span of ten years. Sometimes situations demand some moves of this sort but this should be the last resort. To conclude, going for a debt consolidation service actually helps in a lot many ways. Apart from relieving you of debts, it also entitles you to tax and other financial benefits as well that may actually strengthen your finances in the long run.

Pros and Cons Of Credit Repair

In my last post I had briefly discussed the tit bits of credit score.

Inspired by its overwhelming response, I decided to do a bit of research about credit repair. Credit repair and credit score are inter-connected but there exists a thin line of difference between the two.

Whereas credit score is a number that represents the credit history of an individual, credit repair is the process that one adopts to improve the credit score. Negative credit history is fatal to a individual’s living and one must adopt necessary steps to work on it. Times are not rare when you get bombarded with tele-marketing calls and flayers in mails when credit repair companies are too eager to undertake the responsibility to repair your credit history. Selecting a credit repair company is a Herculean task. In exchange for their services, the primary consideration they require is your trust followed by lump sum money.

Never get lured by false promises who say that it is possible to get rid of record of bankruptcy, defaulted payments and unsettled bills in no span of time. It is never possible to get rid of correct negative information until the lapse of a certain span of time. However if any negative information is found to be inaccurate, you should get in touch with the consumer reporting agency along with copies of supporting documents and a letter bearing your name, address and stating the reason of your grievances.

Secondly, stay out of credit repair companies that provoke you to alter your credit identity and generate a fresh credit report by misrepresenting your social security number. Such misrepresentation of facts is an offense in eyes of federal law offense and you’re liable to get prosecuted for it.

Sometimes they ask you to abstain from contacting any credit reporting company directly. In most cases, these fraud agencies, forfeit your money and disappears into oblivion in a few days.
Most of these companies charge you a fee before initiating the credit repair process itself. This is prohibited by law. A credit repair organization is bound to produce a copy of

“Consumer Credit File Rights Under State and Federal Law” before your sign their contract.

If however you’re not satisfied with your credit repair company, you can report the same at local consumer affair office or your state Attorney General

Worthy Of Credit

In my last post, I was focused on insurance. Something that is equally important in respect of financial wellness is credit score. Most of us are aware of what credit score is It is nothing but a numerical representation of your credit history.

The entire credit history of an individual is taken into account by credit bureaus and the credit score is arrived at. Having a decent credit score is as important as money is for a living. Whether you apply for a loan, mortgage, or even apply for a job, the credit score is taken into consideration. Achieving a healthy credit score is not difficult if we pay a heed to some factors.

First and foremost, get rid of your outstanding debts as sooner as possible. Out standing debts, defaulted payments, can affect your score substantially. If needed you can seek help from a debt consolidation company.

It is a common misconception that consulting a debt consolidation company can lower your score. FICO does not consider it as a demerit. However there may be a mention that you are going through a debt consolidation program to pay off your outstanding liabilities.
FICO score is the most popular one used by majority of lenders in assessing an individual's credit worthiness. Other scores include Transunion, Equifax and Experian. These are all credit rating agencies that calculate credit score.

Something that could be a direct blow to your credit worthiness is any record of bankruptcy. This record not only lowers your credit score, but this mark stays up to 20 years. The length of your credit history is an important factor that increases your score.
If you have been too much persistent to apply for a credit card, and eventually got rejected, your score is likely to be hampered. Too many inquiries on your credit history affects credit score.
Common belief is that is you have been able to maintain multiple debts for a period of time; you are likely to be a dependable borrower.
A great way of improving your score is to diversify your borrowings. If you have a car loan, a mortgage loan, a credit card account, it would reflect your credibility as a borrower and jack up your score.

Safety First

As the adage goes-insurance covers you from womb to tomb. At last, people have recognized the fact that insurance is a necessity. In times of need, it is the insured who benefits from a proper health cover and not his so called nagging agent.

But at the same time, there is no denying that once you cross 40, availing a health cover poses to be a Herculean task. Cardiovascular diseases coupled with fluctuating blood pressure really make the problem all the more difficult

Usually, a licensed practitioner visits the applicant for and asks him certain health related questions with regard to his normal health. The basic idea is to get an overview about the health of the individual. Blood and urine samples are also collected for further examination purpose. However some busy professionals find the process extremely cumbersome and the best option for them is to settle for Guaranteed Issue Life Insurance. The policy demands higher rate of premium as it covers certain additional risks. It is definitely a great option for those who are reluctant to spend time on repeated examination. That however does not mean that you would be exempted from answering certain basic question about your health. And, any concealment of necessary information in this part may make the contract being void altogether.

However if you are in possession of sound health, you would be better off to go for a Standard Term Policy as opposed to spending a few extra bucks for no reason.

Welcome to Finance Updates

Finance Updates-it is my blog on personal finance. I feel that this subject has long been a discussion topic in finance world. Why another new kind on the block?

Well, I feel that personal finance is something beyond debt management, credit repair or forex advices. It is a vast segment that is actually the nucleus of the national economy of a country. As per researches by Prince, a well known wealth research firm, around 78% of upper middle class citizens (net worth being nothing less than a million) are worried about their current financial status. Personal finance is all pervasive and definitely craves a niche in the platform of finance industry as a whole.

One can't deny that with the increase in growth of industries, the consumption of luxury goods have increased. Investments have multiplied. Gradually the importance of household monetary units has increased and all these factors have contributed to upsurge of personal finance industry as a whole.

In my blog, I would like to discuss about each and every segment of this industry and their role towards National finance. Personal finance has a significant role to play in giving shape to financial wellness of individuals and paves their way to a secured financial future.