Debt settlement has been around for years but a lot of people really don’t know about it.  After hearing how the program works, the first question is usually, "can the debt settlement process/program really be legal?"  The answer is absolutely YES!  Debt settlement is a legal and effective solution used by thousands of Americans to help avoid bankruptcy.  The basic idea behind debt settlement is very simple: negotiate deals with credit card companies that are mutually beneficial for both parties.

If a consumer cannot pay their debts in full and is considering bankruptcy protection, there is a good chance that the creditor will not get any or very little payment.  With debt settlement, we negotiate with the credit card company for the consumer to pay a lump sum to satisfy the outstanding balance but usually only a small percentage of what the original balance was thereby benefiting the consumer as well.

The greatest advantage for the credit card company is that they avoid any future problems with collecting the debt, and any concession made on the creditor's part is most obviously tax deductible.  If the consumer files for bankruptcy, the creditor is most likely out of luck so this is the perfect example of “something is better than nothing.”

So then why are so many skeptical of the program and its results?  The problem with debt settlement is not the legality of the practice, but the ethics of some who practice it.  Unfortunately, a number of unethical debt companies have been found to take advantage of consumers' financial strife to boost business.

Some companies with no experience in the finance industry are just popping up over-night, taking money, making promises, but rarely delivering.  Those few “bad apples” make it harder for those of us that are operating ethically to gain the trust of the public.  The debt settlement industry is no different than any other and you need to do your research before you sign up.  We have been in the financial industry for years and we are committed to helping consumers find real solutions to the debt problems.

Debt Settlement has worked for thousands of Americans to help them get out of debt legally, honestly, ethically and most of all quickly.  If you think you might need help, one of our Debt Settlement consultants is here to answer any questions you have and provide a free, no obligation quote on what we can do for you.

Most Americans have a general idea of what their credit or FICO score is.  At the very least they know if it’s good, bad, or just so-so because at some point they’ve had to use that score to obtain some type of financing.  But there are some misconceptions about a credit score that can cause confusion.

The Fair Isaac Corporation (FICO) is who determines your credit score based on a formula that takes many different factors into account.   FICO scores are calculated from the credit data on your credit report.

Your credit score is not just simply, you have a credit, you pay on time and that automatically equals a good or high score.  It’s not that simple.  The actual formula that is used by the Fair Isaac Corporation is a secret but these are the five (5) main factors that affect your score.

1. Payment history (late, on time, etc.) – 35%
2. Amounts owed (especially in relation to the credit line) – 30%
3. Length of credit history (how long have you had credit) – 15%
4. New credit (how many new cards do you have) – 10%
5. Types of credit used (bank cards, department stores, etc.) – 10%

All of these can either negatively or positively impact credit score which can come to a surprise to someone who makes all their payments on time but didn’t realize that because they are maxed out on most of their cards and have opened several new accounts, their score is not as high as they thought.  Even things like other credit companies inquiring into your credit can lower your score.

Having a decent credit score (at least 620) is very important when you are going to apply for any type of major financing like a home loan or car loan.  The higher score translates directly into a more favorable interest rate.  Typically 720 and above will get you the best or most favorable rates available.  However, tough economic times can wreak havoc on your scores and your financial situation.  If this is the case, you may need to speak with a financial expert to re-evaluate your situation and make some changes that will help increase your credit in the long run.  The consultants at First Rate are credit experts and can help you determine what you need to do to maximize your credit score.