Credit Scores and You

Credit scores range from poor (400's), to Fair (500's), to Average/Good (600's), to Excellent (700-850). Those whose scores are in the 400-500 range are considered poor risks for credit and, if they can get credit at all, the interest rates and fees will be quite high. It's a sad fact that those with the best credit get the cheapest loans and those who can least afford them get the most expensive loans. Raising a credit score to an acceptable level involves responsibility about debt over an extended period of time and reducing overall debt to an acceptable level. People who are overextended in their debt are in a "Catch 22" - they need to reduce debt through a consolidation loan but often cannot qualify the consolidation loan which will reduce the debt and ultimately raise their credit scores.

What to Do?

Debt consolidators can often provide critical assistance with a loan when a debtor has exhausted his/her individual efforts through more traditional sources (banks, credit unions, finance companies). The process usually works as follows:

1. The consolidator will analyze your debt and your income and determine what a reasonable monthly consolidation payment would be.
2. Once this is determined, the consolidator can begin the negotiation process with each of your creditors, to lower overall balances and eliminate the penalties and late fees which have accumulated.
3. When the "bottom line" debt amount is determined, the consolidator has a realistic plan with which to approach a potential lender, whether that lender is the consolidator's company or a third party.
4. Lenders are far more prone to take a risk when it looks as if the debtor has a reasonable chance of actually making the payments on time and fulfilling responsibility for the entire loan over the time period proposed. As well, the lender has most likely worked with this consolidator before and is comfortable that the payment plan is one which can work.

Don't Wait Too Long

If you have tried and failed to secure your own consolidation loan, do not resign yourself to defeat and allow the creditors to have their way. You will end up in court or in bankruptcy, both of which will ruin your credit for far longer than a consolidation program.

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