Don’t File Bankruptcy

The credit crisis has made borrowing for or even against your home a more difficult process. However, if you have equity, home equity loans (HEL) and home equity lines of credit or HELOC are still very popular. It is important to understand what these types of loans are and how they work to decide if they would be right for you.

Every homeowner has and is building equity. Many people will use that equity as collateral to borrow money. A HELOC or home equity loan is especially popular for people who are borrowing for a bigger purchase such as a car. Many home equity loans offer tax deductible interest, longer payback and even lower rates. Because of these qualities, they can be a very smart idea for a large purchase. So what type of equity loan should you use, a regular loan or a HELOC? This is one of the first things you should think about when you come up with your borrowing plan.

So let’s get to the details, what is the difference between a HEL and a HELOC? Basically, a home equity loan is just a second mortgage, but acts like a first one. You will usually have a fixed rate, the amount of time you have to payback the loan is fixed, as is the amount you pay as well. Looking at a HELOC, it has often been compared to a giant credit card. Depending on the bank, it may or may not be a fixed rate HELOC and can fluctuate regularly. Also, the payment amount and length of the loan will fluctuate depending on how long it takes you to pay it back.

Which one should you choose? There are pros and cons to both, but you should make it fit the purpose of the loan. Your financial advisor will usually tell you that if it is a non-recurring expense, a home equity loan is usually the better option. If, on the other hand, it is a recurring expense which you will be taking out some, and paying back some, then a HELOC would be the better option. 

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Credit repair counseling is an option for people who have themself in credit disrepair. They assist people in eliminating negative items from their credit repair forms. The best companies are able to delete up to 10 negative items within just 90 days. This is considerably more than you could undertake on your own.

Credit repair counseling companies will help you delete negative items including:

• Late Payment
• Civil Claim
• Repossession
• Tax Lein
• Collection
• Charge Off
• Negative
• Partial Payment
• Bankruptcy
• Closed by Grantor
• Judgment
• Foreclosure

Any one of these negatives on your credit report can make obtaining any sort of finance extremely difficult, so knowing that a credit repair counseling service can eliminate them is reassuring.

Once you obtain a higher credit score you could:

• Get lower interest rates
• Get home loan and car loan approval
• Have more options as a consumer
• Increase your savings

You should only ever use the services of credit repair counseling companies. Do your research online to find professional and well respected services but stay away from those who make unrealistic promises. There are unfortunately too many credit repair scams on the internet so it is up to you to do your due diligence when choosing a company to trust with your financial future. You can find reviews of many services on various websites, blogs and forums.

These services can help you form a budget that you can use on a daily basis so that you don’t head towards bankruptcy which is the very worst case scenario. Bankruptcy means that your credit rating will be bad for at least 10 years which makes life extremely difficult. You should avoid bankruptcy at all costs.

Credit repair counseling services help you pay of your old debts as well as providing advice on how to sustain your current bills and loan repayment commitments. This results in your credit improving slowly over time. They will collect your FICO scores and ask you for your monthly bills and income details so they can implement a plan for you. They can also find records on your report that can be argued against which gives you a chance of having some items removed from your report.

Credit repair counseling services are an excellent choice for people who are unsure where to start on the process to credit repair. Although they cost a fee, this small investment can mean the difference between regaining your credit reputation or losing it altogether.

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