Don’t think of credit consolidation as the way out though.  No one likes to feel like they have debt and bills piling up month after month. This is one of the reasons why credit consolidation services have become so popular in recent years. People are tired of having 20 or 30 bills to keep up with because it is too easy to let things slide and get behind. It can become completely overwhelming to deal with the sheer number of bills you have to on a monthly basis.

Sometimes things unfortunately get missed and the collector calls start. Those calls are never pleasant to deal with.

Credit consolidation is simply where all of your loans are put together into one. This means that you have one bill you pay each month rather than dozens of miscellaneous bills. This might mean that you consolidate your car loans, student loans and other types of financial obligations. It makes paying your bills a much more manageable task and certainly is easier. Instead of writing out several checks each month and possibly making a mistake, you’ll have one single check to write.  These are all the reasons why people find credit consolidation loans so attractive.  But what they dont realize is that you have just secured your debts against your home and should your financial circumstances take a nose dive your home will be at risk.

Sometimes when you consolidate your debts, you can also change your payment terms and restructure the way your loans are being repaid. You may even get a longer time to repay the loans as well as a lower interest rate. Sometimes the focus may be on medical bills, student loans or even car loans. Basically what happens is these credit consolidation companies will combine your loans and make the payments for you. Therefore, you are making your payment to the credit consolidation company. It is almost like they bought your loans from the various lenders.  The sad thing is that if you were to improve your 650 credit score first you would get a much better deal from your existing creditors and would probably be out of debt a lot sooner.

If you feel that you have no option but to look at these types of loan, please do your research before hand.  When looking for credit consolidation services, it is important to do a lot of research online to find out who is reputable. Unfortunately, there are a lot of scammers in this type of business so it is important that you read customer reviews and do your due diligence before choosing a company. The last thing you want to have happen is to put more financial strain on you and your family by choosing someone who is less than honest to help you deal with your debt.

But I cannot stress how important it is to try to improve your 650 credit score first before you explore other options. Having a great credit rating opens all sorts of doors.  Lenders will offer you great interest rate deals and you will benefit from lower insurance premiums etc.  It isn’t difficult to improve your credit score as our site will show you. You could even end up with a perfect credit score!

The good news is that if you can increase your credit rating, which is relatively simple to do once you know how, you can benefit from lower interest rates, lower auto and home insurance rates and you may even land that dream job.  So how do you go about improving your records?

You should contact each of your creditors and ask them to review your account to see if they could reduce the charges you are paying.  If you have been a good client and have made regular payments, you may be pleasantly surprised. In this difficult economic period, a lot of people are falling behind on their payments. These clients make the credit companies a lot of money but cause them hassle as well.  So often they will reduce the charges on the accounts of good customers.  It doesn’t hurt to ask and you could save money.  But perhaps more importantly, lower charges means that the money you do repay reduces the balance oustanding quicker and this will improve your score.

If you are struggling to meet your payments, then you should try to negotiate with your creditors to see can you come to an arrangement where you pay a lower amount for set period of time. Alternatively if you have a lump sum available, perhaps after having a garage sale or selling stuff on an auction site, you could ask if they would be prepared to accept a lump sum debt settlement figure.  If they say yes, ask them to confirm this in writing before you make the payment.  Just be aware that debt settlements can cause tax issues and may also affect your future credit rating although it should have less impact on your score than falling behind on payments or having judgements registered against you.

While a 700 credit score is not a bad result, it is easy to improve it by following these steps.

* Always pay your bills when they fall due.  This is the easiest step to get that credit score rising.

* Review your credit reports from the three agencies, in particular looking for dormant accounts. These are accounts where you applied for credit but have never activated the account. You may be surprised to know that they will have a negative impact on your credit rating so if you do find any, ask for the account to be closed immediately.

* Don’t make more than one application for credit at a time and never do it unless you actually need the new account. Too many applications will send your score rocketing downwards exactly the impact we are trying to avoid.  If you think you want to apply for a new lending facility ask yourself if you really need it.  Perhaps there is another way for you to raise the cash by working extra hours or perhaps selling your services online. You can earn funds by writing, proofreading etc.  If you are in a clerical role you would be pleasantly surprised at the number of opportunities that the internet has to offer to allow you earn extra dollars.

* If you think you are going to be late with a payment, contact your creditor immediately and let them know. Most will be happy to work with you and will probably not file a deliquent report. They like their clients to remain in contact particularly if there is going to be a problem.