Today everyone is looking for a path to financial freedom during this difficult economic climate.  They are looking for ways to safeguard their reputation and keep their buying and borrowing power.

The consumer knows that loans, bills, mortgages and credit card charges can increase very quickly, in particular the credit cards used for day to day expenses, it is a challenge to maintain the monthly payments.  So in order to safeguard the consumer’s reputation and credit score rating, they need to review and relearn ways to protect themselves.

Some of the things the consumer needs to revisit are the following key ideas:

• Am I borrowing wisely and paying back promptly?
• Have I identified, avoided and recovered from various financial pitfalls?
• Have a gotten a recent copy of my credit report and do I understand it?
• Does my family have a financial plan for the future

The key to being a good credit risk is based upon the consumer’s credit score.  This score is a numerical number assigned to the consumer based upon their credit history. This history is based upon number of opened and closed accounts, payment history, including late or missing payments and collection referral, original credit limit, current balances, etc. The higher your credit score is the better your ability to borrow at more favorable interest rates.  The lower the score the consumer is charged a higher interest rate or decline altogether.

Basically, the consumer needs to obtain a copy of their credit report from one of the following three credit bureaus: Equifax, Experian or TransUnion.  Once you have this report, the consumer needs to set down and review this report for accurate information. 

The consumer needs to explore a debt settlement program as an alternative to their financial hardship. Debt settlement is a method by which a third party negotiates on behalf of the consumer to reduce and sometime cut in half their credit card debt.  This is not a quick fix or an easy process.  The consumer needs to understand how this program works and how it will affect their credit score.

Any consumer who decides to enter into a debt settlement program needs to be aware of the positive to the program and pitfalls.

What are the positives to this program:

·         The consumer now has a plan to climb out of debt.

·         The consumer has a timetable for getting out of debt.

·         The consumers credit will improve overtime as the debt is negotiated.

·         The consumer may not continue to face the harassing collection calls.

·         The consumer feels better about trying to resolve their debt by not filing bankruptcy.

 What are the pitfalls:

·         Consumer credit score will drop.

·         Consumer may face a tax bill on the forgiven debt over $600.00.

Every consumer worries about their credit score.  This credit score is key for allowing the consumer to borrow whether to purchase a home, car or apply for a new credit card. So once the consumer starts on the debt settlement program, one of the key steps to helping you’re current score is to continue making all other payments on time,  This means making your monthly mortgage, auto and equity line payments.  It is important to continue meeting your secured debt obligations.