Advice on high debt consolidation and credit

Whenever a company pulls a copy of your credit report, the credit bureaus will list an inquiry on your credit report. First, you can check out the wealth of informative articles and info on credit available online at Bills.com

Now, for your question regarding debt consolidation... But very quickly, if you want a free debt consultation with one of Bill's approved debt help partners, click here: Free Debt Consultation

If you own a home, a secured debt consolidation loan may be right for you. This type of loan is essentially a home equity loan which is used to pay off your other creditors. Secured consolidation loans help many consumers by consolidating all of their debts into a single monthly payment with a lower interest rate and payment amount. However, since your husband is unaware of your debt problems, a consolidation loan secured by your home may not be a practical solution, as keeping this type of loan from your husband could be difficult. Also, be careful before you borrow money against your home to pay off credit cards and other unsecured loans; you will be converting what was previously unsecured debt into secured debt. This could cause you problems down the road if for some reason you are unable to make your payments, or if life circumstances force you to file bankruptcy, as you may not be able to discharge the secured debt as you would unsecured debt. However, secured debt consolidation loans work for many people, so this is an option to consider carefully.

Bills.com makes it easy to compare mortgage offers and different loan types. Please visit the loan page and find a loan that meets your needs at: Free Mortgage Refinance Quote

Another option to consider is a Consumer Credit Counseling Service, or CCCS. CCCS companies offer numerous services, such as financial counseling and budget planning, as well as Debt Management Plans (DMPs). In a DMP, the CCCS would arrange a new payment amount with each of your creditors, usually based on a reduced interest rate. You would then make a single monthly payment to the CCCS which would distribute the funds to your creditors, based on the new payment amounts. There are several drawbacks to CCCS, though. First, depending on your creditors, it may not be able to reduce your monthly payments enough to improve your financial situation. Second, it may have a negative impact on your ability to obtain a loan, so you may not wish to enter into a DMP if you anticipate any large purchases, such as home or an auto, in the near future. Third, the average DMP takes around five years to pay off your debts, so you must be willing and able to commit to a long-term repayment plan.

You may also want to consider the services offered by debt settlement firms. Rather than making monthly payments to your creditors, these programs negotiate lump sum settlements with your creditors, frequently reducing your debts by 50% to 60% of your principal balances. These programs usually take only 2-3 years to complete, so this is a good option for many people to rid themselves of debt in a relatively speedy manner. In many cases they can also reduce your monthly payment toward your debt. There is one major drawback to debt settlement programs, though- they will significantly damage your credit while in the program and for at least a year or two afterward. However, if you are currently unable to afford to pay your creditors, the hit to your credit may be worth the benefit of ridding yourself of credit card debt. Because of your financial difficulties, you may want to stop focusing on the importance of your credit score. Although you may have a good credit score, because of your low income and large debt amount, most lenders will likely see you as a high risk borrower, and may not be willing to extend you credit, so your actual credit rating may not good as you believe. A debt settlement program is probably the fastest way to resolve you debts, and once you repay your debts, you should be able to rebuild your credit score through careful management of your credit accounts.

Hopefully, one of the several options I have described above may be able to help you. I encourage you to explore the Bills.com Debt Help page to read more about these and other options available to you.

Next -- you requested information regarding your credit inquiries and bad credit. Credit inquires fall into two general categories: "hard" inquiries and "soft" inquiries. Hard inquiries, which can negatively impact your credit score, appear when a potential lender checks your credit as a result of your applying for new credit. Soft inquiries appear when a company pulls your credit without your prior authorization, or when you pull your own report. For example, an unsolicited "pre-approval" letter from a credit card company will result in a soft inquiry. Soft inquiries are not disclosed to your potential lenders when they pull your credit report, and they do not affect your credit score. The primary purpose of soft inquiries is to allow you to see who has been reviewing your credit report.

How you should proceed depends on what type of inquiries are appearing on your credit report. If they are soft inquiries, then there is little concern, as these inquiries do not affect your credit score. However, if they are hard inquiries, you may want to review the listings more carefully. As stated above, hard inquiries result from your applying for new credit, not from established creditors pulling your report for review or from unsolicited credit offers. If you find inquiries you think are being improperly reported, you should notify the credit bureaus of the problem. If the inquiries have been reported inaccurately, you should have little difficulty in having the problem corrected. The contact information for the three major credit bureaus is below:

Equifax

800-685-1111

www.equifax.com

Experian

888-EXPERIAN (397-3742)

www.experian.com

Trans Union

800-916-8800

www.truecredit.com

All credit inquiries should come off your credit report after two years. If you're not willing to wait, you may take these steps:

First, find out which credit inquiries are getting in your way. Order all three of your credit reports. When your reports arrive, look toward the end of your credit report to find the inquiries. Some of the inquiries are only promotional and will not be shown to prospective credit granters. You need not worry about those. Identify only the inquiries that are shown to credit granters. You should recognize some of these as places where you applied for credit, but others may be a complete mystery to you.

Find the addresses for each credit inquirer. Your Experian credit report will list addresses for each. Your Trans Union and Equifax reports will not include addresses. Match your Experian with your Trans Union and Equifax reports. You should be able to use the same addresses on the inquirers that are listed on Experian. If some of the inquirers don't show up on Experian but do show up on either Trans Union or Equifax, you will have to call the credit bureau to get their address.

Prepare letters to each inquiring creditor asking them to remove their inquiry. The Fair Credit Reporting Act allows only authorized inquiries to appear on the consumer credit report. You must challenge whether the inquiring creditor had proper authorization to pull your credit file.

Some of your creditors may provide documentation that a credit inquiry was authorized by you. Read the authorization that you signed very carefully. If there is any ambiguity, you can write back and argue that the inquirer's authorization form was too complicated and not easily understood by the layman. You can threaten to contact the State Banking Commission and complain about a deceptive and unclear authorization form if they don't remove your inquiry.

Some creditors will try to ignore your challenge. Be sure to send each letter Certified Mail Return Receipt Requested and keep close track of the time that you sent the letter. If the inquiring creditor doesn't respond within about thirty days, you will have ample grounds to call the inquiring creditor and demand some action. At that point, it's almost irrelevant whether or not you authorized the inquiry. Now the issue becomes the creditor's lack of response to a consumer dispute. Be sure to hold your ground. Demand that the inquiry be removed immediately or you will complain to the State Banking Commission or similar authorities.

Many of your inquiring creditors may simply agree to delete the inquiry as a courtesy or because they cannot (or will not) verify your authorization. Remember, it is not likely that you will need all of your credit inquiries removed, just enough of them to keep you from being denied credit.

I hope this information helps you Find. Learn. Save.

Best,

Bill

bills.com