Questions abound after agency downgrades US credit rating CNN

06.08.11

One area of concern is whether a downgrade would ward off investors from buying U.S. debt and increase the country's cost to borrow money, therefore increasing consumer interest rates on everything from mortgages to car loans to student loans.

"Only time's going to tell how we're going to be affected," former U.S. Comptroller General David Walker told CNN. "Interest rates that affect the U.S. government ultimately can ripple throughout the economy, which is not good news given our weak economic condition already."

Rating agencies such as S&P, Moody's and Fitch analyze risk and give debt a grade that is supposed to reflect the borrower's ability to repay its loans. The safest bets are stamped AAA. That's where the U.S. debt has stood for years.

Moody's first assigned the United States a AAA rating in 1917. Fitch and Moody's, the other two main credit ratings agencies, maintained the AAA rating for the United States after this week's debt deal, though Moody's lowered its outlook on U.S. debt to "negative."

Source:

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Can someone recommend a debt consolidation agency to help me with my credit?

Oct 25, 2006 by Karla H | Posted in Credit

I have a dept of no more than $3K --- should I go to a debt consolidator? If so, please recommend one...

No do not get a debt counselor at this point! In many ways it looks like a bankruptcy on your credit report to many creditors. You have several options:
1. Call the credit cards to have your int rate lowered or let them know you will be transfering your balance. (many times they will lower it)
2. If they won't lower it below 5% look online for a different card to transfer the balance onto with no annual fee or balance transfer fees. When the card comes CUT It UP so you won't use it.
3. Go to your local credit union and talk with a loan officer about their loan options to consolidate and pay off your debt. For your best rate and most likely approval route, have some security like a car you have paid off.

www.lindseysmith.pureromance.com | Oct 25, 2006

Try it yourself, read books and check out the web for information about doing it.
ron d | Oct 25, 2006

It depends on your income and whether or not you can afford your monthly bills. Consumer Credit Counseling (CCC) can be found in the phone book, and their services are free to help people manage their debt.

Best wishes.
Rhonda | Oct 25, 2006

i had a debt of 6 thousand and used clarion. they made my credit worse! it shows up that you are using the consolidation thing. if you have any kind of communication/bargaining skills, i say negotiate with the banks yourself. they will probably work something out for you and then stick to the payments. like clockwork. then your credit will improve. debt consolidation makes it look like not only did you get in debt, but you couldn't get yourself out and lowers your score a LOT.
advicemom | Oct 25, 2006

$3,000 isn't THAT bad of a debt considering the average american household debt is $8,000.
I'd start with contacting whomever you have the debt with and see about setting up a payment plan or reducing the interest rate.
epix1 | Oct 25, 2006

If you have a debt of no more than 3,000......then this is something that you can do yourself. If most of the debt is on a CC, then look for a CC with 6-months 0% financing. Then tranfer all your debt to that.......juice up the payments and work paying it off.
stolibabe2003 | Oct 25, 2006

You could do a debt consolidation through your bank but you would have to have collateral. If you call up the companies that you owe to, a lot of times they will work with you to pay off your debt and give you a break on the interest, especially if you set it up as an automatic debit on your checking account.

NEVER EVER NEVER use those debt consolidation companies that you see advertised on TV. They may pay your debt off and maybe a bit sooner, but they are listed on your credit report and they look bad. Also, what they don't tell you is that while you are paying off the debt through them, you are not able to apply for any new credit.

Good luck!! $3k sounds like a lot of money, but the average person is $20k in debt. Doesn't sound so bad.
lil_hem_n_va | Oct 25, 2006

Doing it yourself is always the best approach especially since your debt is relatively low and manageable. You'll be suprised at how far you can get negotiating with your creditors yourself.

Many debt consolidation companies charge a monthly fee that doesn't not go towards paying down your debt and alot of the require you to close your accounts as part of the agreement. Before you commit to anything read this http://creditwisdom.blogspot.com/2006/09/deal-on-credit-counseling-repair-and_15.html
Lianne | Oct 25, 2006

Debt consolidation doesn't work. It doesn't solve the problem which is the habit of spending more than you make.

Checkout this article I posted on my blog site (just last night) about debt consolidation.
Scott C | Oct 25, 2006

I found some good info here.
David D | Oct 25, 2006

Are Debt Consolidation Agency's a good idea to help lower debt?

Jan 26, 2007 by CaliGirl | Posted in Personal Finance

Between my husband and i we have about 12 credit cards. I know, i know we shouldn't have gotten ourselves in this mess to begin with.
We are 22 years old, I have a steady well paying job and he is in the military. We do not have creditors calling yet, but we are struggling to pay the minimum payments. 1 of his credit cards did get recently charged off.
I tried shopping for Debt Consolidation Agency's and the one i looked into was going to charge us a $2,750 service fee! Is this normal?

Our total debt in Credit Cards alone is appox. $18,000 (not including car payments, household bills etc.)

HELP!!! If not a Debt Consolidation Agency, then what? And if i go with a Consolidation Agency will it affect my credit?

You don't have to go to a debt consolidation agency. You can try one of the banks or financial service companies too.

There is one company out there that analyzes your debt and see if you qualify to consolidate through them for free. If you qualify with them, the cost to consolidate or refinance is included with the loan. When you consolidate your debt into one monthly payment, usually the monthly payment is lower. This means, you saved some money.

But the company doesn't stop there. They show you how to get smart with the savings. They use some of your saving and apply it to the principal and the rest of your savings is invested in mutual funds. By adding more principal to the payment, this will get you out of debt sooner. The program has a free bi-weekly payment option as well. Paying bi-weekly will get you out of debt even sooner than just paying monthly.

Fees associated with consolidating debt or refinancing usually cost a couple thousand dollars. There is so much fees involved to do it. Its like you buying your first home and there are fees involved in getting that mortgage.

Doing the Right Thing | Jan 27, 2007

Yes, they are.
markos m | Jan 26, 2007

All a debt consolidation agency does is loan you money. They pay off your debts and you wind up paying back the same money to them at a much higher interest rate, plus the stated fees.

Go to a credit counselor who doesn't want to sell you anything for assistance in dealing with debt.
tonalc1 | Jan 26, 2007

no, don't use them. you can consolidate your own bills but it will take some effort on your part. YOU have to learn money management and just can't give it to someone to fix or you will be back in debt again.

they are debt CON-solidation agencies for a reason. the can mess up your credit even more. it's better for you and hubby to sit down together and write down a payment plan on how you are going to pay your bills. the 2,700 you spend with an agency can be applied toward your debt.
Quiet Storm | Jan 26, 2007

i think wells fargo financial offers loans to consolidate your bills, check them out.. I hope that helps.
tran77x | Jan 26, 2007

Debt consolidation companies can be very helpful yes. Talk to a few and make sure you are careful, there are scams out there, but most are helpful.

http://www.too-many-debts.com
mikeherman45 | Jan 26, 2007

Do not use Debt Consolidation Agencies. Debt consolidation does not fix the problem of being in debt. Check out Dave Ramsey's book The Total Money Makeover. It provides a step by step method to get yourself out of debt and building wealth so you never ever have to borrow money again.

It's working wonders for my husband and I.
Jen G | Jan 26, 2007

you need to start reading books on how to manage your money and how to get out of debt books. educate yourself. This is a sad thing at such a young age. Debt con. need to make money on you also. No service is free. You need to start living below your means.
fleshy queen | Jan 26, 2007

Does using a debt consolidation agency to pay off credit card debt effect your credit score in a negative way?

Feb 05, 2008 by jajalermas | Posted in Credit


Yes, of course. Your credit score has already taken a big hit by having all that debt. Most lenders view debt consolidation as a sign that your in financial trouble & it brings your score down. It will stay down until they see proof that your paying you bills on time and making more than just the minimum payments.

rpf5 | Feb 05, 2008

yup
Big Bad Nobby | Feb 05, 2008

yes it does but it is better then the alternative... if you are having problems get help well you can!
She1 | Feb 05, 2008

It will probably trash your score. So many of these debt consolidation/credit repair companies collect the monthly payments from you and just sit on the money. The wait till all your credit cards are 3 months late then try to negotiate settlements for less under threat of you filing bankruptcy.

Best way to pay off your credit cards is to put yourself on a strict budget. Eliminate all the extras -- cell phone, eating out, new clothes, alcohol, premium cable and internet, etc. Take every penny you can squeeze out of that budget and throw it at the highest interest rate credit card, while making minimum payments on the rest. When the highest card is paid off, move to the next till they are all paid.

You can also look for wasy to bring in extra cash to throw at the debt. Have a garage sale, collect alum cans, get a second job.

If you really work at it, you an pay off all your credit card debt within 2 years. Not only will you be out of debt, but you will have a consistent, on time payment history which will boost your score and you will have learned some very good financial management skills.
bdancer222 | Feb 05, 2008

All that answered are correct and I can give you a short answer as to why. If you need help with your debts these agencies are wonderful but you must meet their criteria to participate.

Your credit score will be affected. It may also prevent you from purchasing a home, auto, etc. for a number of years. A negative to your credit is created because you are having someone else pay your "bills". Credit scoring uses many factors and one is your responsibility to pay bills on time with a minimum required payment.

Debt Agencies will negotiate with your debtors a payoff amount and monthly payments. If you qualify for the program a percentage of your income will go to the agency to pay these payments. You must insure the agency is paying as agreed.
Bruce T | Feb 05, 2008

Should I go with a Debt Consolidation Agency/Company to eliminate my credit card debt?

Nov 02, 2008 by cobratapout | Posted in Credit

I am wanting to rid myself of all debt and consolidating under one company at first sounded great. Now I'm getting "cold feet"! Should I continue on w/ them or should I "tough it out" and try and do this myself? The chief thing I like about consolidating is that THEY deal w/ headaches for me, not to mention I'm getting ONE payment as well as lower interest and "re-aging" of accounts. Any advice would be appreciated!:)

They can be very helpful just be sure that they are not for profit companies. Also check the Better Business Bureau for the one you pick before signing anything with them.

Tina | Nov 02, 2008

If you dont want to ruin your FICO score any further, your best bet is Consumer Credit Counseling Service which is a not-for-profit agency.

All other debt consolidation programs end up further ruining your credit score plus you pay other consolidation programs around 15% of the entire debt you owe as a "service charge"!
DaMan | Nov 02, 2008

Consolidation is used for several different things.

1. You get a big loan to pay off all your debt. It's bad to transfer debt to a new loan. People tend to run those credit cards back up and then have the credit cards and that big loan payment.

2. Debt settlement. Very bad. The companies take your money and let all your accounts go 90 days past due then try to offer lowball settlements. Not only does this trash your credit, but most credit card companies won't play and simply sue you.

3. Credit counseling. Check here for an NFCC member in your area: http://www.nfcc.org/. They are legit, non-profit companies that offer debt management programs for a nominal fee, if you qualify. They don't negotiate debt settlement. They negotiate lower interest and payments to allow you to pay off your debt. While in the program, it is noted on your credit file. However, upon completion, the notation is removed and you have a good payment history.

If you are not actually struggling to make your payments, you should work on doing it yourself. Make a strict budget. Eliminate all the extras -- cell phone, eating out, new clothes, etc. Take every penny you can squeeze out of that budget and throw it at the highest interest rate credit card, while paying minimum payments on the rest. When the highest card is paid off, move to the next till they are all paid in full.

The advantages are that you will learn some new finanancial management skills, pay off your debt, and have a good payment history/credit.
bdancer222 | Nov 02, 2008

I would stay away. You can usually get a lower-interest consolidation loan from your bank or local credit union. Plus, they won't rip you off.
Bill C | Nov 02, 2008

Does using a debt consolidation agency to pay off credit card debt affect your credit score?

Feb 05, 2008 by jajalermas | Posted in Credit


The consolidation company can't affect your credit score themselves. By not filing bankruptcy and/or making scheduled payments based on an adjusted amount from the assistance of the debt consolidation, you can say they have some affect. It really isn't a direct affect though.
Jim Maryland | Feb 05, 2008

if you pay off your credit card for a settlement amount instead of the full amount you owe, someone told me that shows on your credit report.
me | Feb 05, 2008

Yes, it has much the same effect as a bankruptcy. Don't use them. You can do the same thing yourself. Just call all your creditors, explain your situations and see what can be done. Just make sure you only agree to payments, or settlements, that you can keep. Usually, by the time you get to this stage your credit has already been affected.
ontopofoldsmokie | Feb 05, 2008

http://obscureriches.wordpress.com/
frigg22 | Feb 05, 2008

yes a payment plan shows in your credit and does the same damage as a bk
chicafresa | Feb 05, 2008

Which is the best debt consolidation agency/company?

Jan 05, 2009 by Sarah | Posted in Credit

I have seen a ton advertised, but would prefer to choose one which is reputable, but will also save me the most money.

People use the term 'consolidation' to mean several completely different things.

Debt consolidation is taking out one big loan to pay off all your debts. This is shifting your debt to a new loan. You must be disciplined to not run the credit cards back up. Many people end up with the big loan payment and all the credit card payments.

Debt settlement is a very bad idea. These companies make lots of promises but will take your money and let all your debts go 90 days past due. Then they offer lowball settlements under threat of you filing bankruptcy. Not only does this trash your credit, but most credit card companies refuse to play and will just sue you. The settlement company won't be helping with that lawsuit either.

Debt management program thru a credit counseling services can be a good option if you are having trouble keeping up with your payments. Make sure to use a NFCC member (http://www.nfcc.org/). These are legit, non-profit companies that offer debt management programs for a nominal fee. They negotiate lower interest and payments so you can pay off your debt.

While in the program, it is noted on your credit report. However, upon completion, that notation is removed and you will have decent credit.

bdancer222 | Jan 05, 2009

i have very bad credit and need to fix it. thinking about calling a debt consolidation agency?

May 01, 2008 by dgmotley | Posted in Credit

before you say those companies are scams. i have two friends that used them. they told me their scores improved in like 6 months to a year. one used lighthouse credit foundation. the other one used a company called netdebt. i have a lot of stuff in collections. its just a lot easier for me to lump that all into one payment

I completely agree with you. Sometimes, when you just can't make the payments with how they are currently set up or you want to consolidate to make it easier, you need help. I was like that a year ago. I am currently using CareOne. And, although they do charge a monthly fee for their service, they don't make promises - and that's the difference between a legitimate company and one that isn't. Today, I have less debt and because of that, my credit score is about 50 points higher. I would recommend calling CareOne.

Good luck.

tudorjason (matt) | May 01, 2008

Can you recommend a Non Profit Debt Consolidation agency???

Apr 17, 2006 by soonerfan0808 | Posted in Credit

I just posted about co-signing for my husband who has horrible credit(25,000).. but got to thinking. We pay all of our bills on time NOW and he doesn't miss payments. The debt he has is old debt(charge offs). I just printed off a report for him on www.freecreditreport.com so I can figure it all out. Anyways, I want to find debt counseling or a debt consolidation agency that can help him clear it up. What site can you recommend?
Thanks!

Perhaps instead of a debt consolidation your in need of a credit repair company, as these old debts have been charged-off already.?

creditease | Apr 18, 2006

what is The Truth About Debt Consolidation agencies?

Sep 19, 2007 by supermoren02130 | Posted in Credit

i am considering going to an debt consolidation agency.
i am not shore if it is a good idea.
i owe close to 20,G's
i am opent to sugestions

Is there a government agency that helps with debt consolidation?

May 12, 2006 by Chubby | Posted in Credit

I need a reliable trustworthy debt consolidation service quickly. I've heard that most advertised agencies are to be avoided.

Try out A+ Financial their interest rates are really low and the payment are cheap. They even have free advisors come to your home to discuss it all with you. Depending on your debt ratio you might need a co-signer but it is a really good company... I went from paying 870/month on debt to 246/month for 5 years. Their rates are lower than 6%

amanda b | May 12, 2006

Debt Consolidation FAQ

Debt Consolidation FAQ

I have approx lb2000 worht of debt, but am struggling to see where i stand near all of the seperate little bits. Does anyone have any counsel as to a debt consolidation company who specialise in this amount? ANy help is appreciated I think you will find most loan companies will not lend for just 2k. As…

Please advise me on my best options. I am a single mom struggling to the point that I cannot even transport my kids to McDonalds. I am recently divorced and since divorcing have incurred the following debt, (I receive child support but even so): Discover Credit card 1: ,334.59 (pay past its sell-by date a month)…

I have about 5000 of credit card debt , I rent so home equity wont work (i rent) I cant really cut down on stuff , my FISCO go from 740 to 505 in a year (financial problems). So i need give a hand getting help with debt consolidation beside about 200-250 monthly payment…

I’m looking for a way to consolidate my debt by either using a debt consolidation company or going to the dune for a loan. I am about 20,000 in debt and inevitability help! Does anyone have any virtuous companies they could recommend?? i advice you too contact SBA ELOAN and the manging director is email…

I have 5 C.C. that I ve been bringing up the rear since nov 07. And they are all in collection plus my credit chalk up is 314. I want to start fixing that now that I have a duty. BUt I need to know if a debt consolidation will be more beneficial in lieu…

is debt consolidation done with student loans? and if it is, how long does it show in the credit account? thanks “> If you have a home mortgage and a flawless credit score you can consolidate student loans and car loans into the unharmed loan. It depends on your home’s value and if…

I missed a part of CNBC’s “The Millionaire Inside” Debt-free program where they mentioned the reason why debt consolidation is bad. Did anyone catch it or can explain to me why it may be a desperate idea. I’m in a program and I’m debating whether I should stay surrounded by…

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