Monthly Archives: March 2014

How Can Consumers Consolidate Debts To Improve Their Credit Scores


Three ways that consolidating debt can improve a person’s credit score

There are three important ways that consolidating their debts in order to improve their credit score. This includes preventing debts from going into default, reducing the amount of interest on a debt, and showing that you are currently in the process of repaying a debt.

The first way that consolidating debts can improve a person’s credit score is that a single loan payment is far easier to manage. This is because a person only needs to make a single debt payment once a month.

In addition, it also means that a person can work with the creditor in order to make the payments. Creditors have an interest in having the debt paid back, and so they are willing to give a person a lot of leeway. A single loan payment allows a person to rely on the leeway offered by a single creditor, which means that they have far less items to juggle.

A single loan also means that a large number of small debts are not likely to go into default. This means that a person’s credit score is far less likely to be damaged.
The second way that consolidating debts can improve a person’s credit score is that a single large loan payment is oftentimes offered at a much lower rate than smaller loans. This can greatly help a person to get out of debt quicker.

A consolidated loan also greatly reduces the number of fines that may accrue as the result of not paying the loan on time. This is because a consolidated loan is more willing to work with a person to make their payments, and because a person will only have to face a single late charge as the result of not having the money on time.

Consolidated loan also offer a much better compounding rate than other types of loans. This is because smaller loans are oftentimes compounded on a weekly or biweekly basis. In most cases the interest on a consolidated loan will only be added on a monthly basis. This further helps to reduce the amount of interest a person has to pay.

The third way a consolidated loan can help a consumer improve their credit score is by letting them show that they are working on paying off all of their debts. This is because a person does not have to worry about avoiding one debt payment to make another. In addition, paying off a single loan will allow a person to show that they owe less and less as each month goes by. This can help a person’s credit score to continuously rise.

What Lenders In Texas Offer Bank Backed Installment Loans

Why would anyone want an installment loan, or better yet what exactly could an installment loan do for you? Maybe, you want to put your financial house in order. Maybe you actually need to put new furniture in your home. A payday loan can’t do it, and you’d lay out entirely too much money in interest payments if you tried to accomplish your goals with credit cards. Whatever the case, I’m going to try to give you an idea of what lenders in Texas offer that bank backed installment loan you desire.

Before the financial meltdown, I worked in secondary wholesale financing. I was just about to make that leap into sub prime lending because the money was flowing. I wound up taking some time off before the switch and realized that I didn’t really want to head down that path. Nowadays, I find myself on the other side; completing non-revealed compliance audits for bank, credit card, and large investment firms. I’ve found that even with all the extra regulation to try to put an end to the predatory behavior, such as Unfair, Deceptive or Abusive Acts or Practices (UDAAP), it is still attempted to this day.

If you are lucky enough to have an active duty service member or a veteran in your family, then you will find yourself in the best position, especially in Texas. Because, the Air Force Federal Credit Union is based in San Antonio. If you can become a member of this credit union, or any of the armed forces credit unions, then you have access to a full service institution with the competitive rates possible. The Air Force Federal Credit Union is restricted to residents of Texas, Oklahoma, Louisiana, Mississippi, and a few other select places.

Another great armed forces credit union is Navy Federal Credit Union. Navy Federal has offices all over the world and accepts members from all branches of the military. This is another great lender that can offer all kinds of services. Its installment loans also have great interest rates, and not only the services offered, but also the service they provide is unparalleled. They have branches all over the world, so wherever you may be there is always a lifeline.

If you cannot get a membership from any of the armed services credit unions, then I suggest that you first look around for a credit union within your vicinity. Through my audits, I have found them to be the most trustworthy and personable. Because you have to usually put five dollars into a savings account, they consider you a shareholder instead of a number. That dollar sign on your forehead is erased and a bond is created that can help pair you with what fits your current needs. Here are a few that I have researched:

Texas Trust Credit Union – This serves Dallas, Tarrant, and Henderson counties and parts of Ellis and Johnson counties. They do offer better rates than credit cards and set up plans that will help you pay them off in five or fewer years. They are also a full service financial institution that’s ranked 21st in asset size.
• Credit Union of Texas – Another full service financial institution, but this one has special loan packages that are specifically designed for teachers. They have a very user-friendly site with online applications.

My problem with these two, was that they were both mainly in Dallas. I thought it would be easy to go through the list and research as many as I could throughout Texas. But, the more I researched the more I found until I realized that there were 512 listed across the state.

The other place you may go searching for an installment loan, the obvious place, is your local bank. A bit of advice is to look at the larger banks because they are under the microscope and have to follow very rigid rules to make sure all of the disclosures are accurately laid out. The top five banks in the state by asset amounts are:

1. JP Morgan Chase Bank
2. Bank of America
3. Comercia
4. Wells Fargo Bank South Central N.A.
5. Compass Bank

The only two out of these five that are strictly state banks are Comercia and Compas. The others are national serving banks. There are plenty of lists on any search engine you use as long as you search for, “the largest banks in Texas by size.” There is also a list of banks that are located on the Texas Department of Banking site when you click on the link of history. Or, if you really want to take some time you can visit the FDIC list of banks. Both sites are a bit difficult to navigate though, and by the time you actually even begin your search you could probably already have that installment loan.

Contributions to this article were from Eric Smith, an independent financial journalist residing in Austin Texas.