Debt Management Scoring Reveals Practical Data to Save Money

According to a report by the Federal Reserve, Americans are more than $3 trillion in debt.  If you’re not constantly assessing and managing your own debt, being approved for credit items such as mortgage loans can be extremely difficult.

For instance, credit experts often ask clients if they can assess their own debt management when it comes to such things as getting a good mortgage loan, personal loans and even qualifying for credit cards. In turn, the experts explain that a good credit score is all important in this uncertain economy when financial institutions rely on hard date such as credit scores to assess your credit risk.

Debt management plans to boost your credit

There are many people today who simply do not know how important credit scores are for their financial future. In turn, experts say that it is best to set up a good financial strategy that tackles your debt head on with a real plan for sorting out a realistic time frame to get you debt free and able to qualify for that mortgage loan or other type of loan.

Your credit score can be the all important three-digits used by banks and other lenders for decisions on if they will lend you funds for a business loan or a home, car or other major purchases. While many people feel this credit score is not an accurate picture of you as a credit risk – since many people feel credit scores are skewed or inaccurate due to bad record keeping by creditors that report to the top credit scoring bureaus – it is a fact of life like death and taxes.

Thus, the solution for developing good debt management plans is linked to hiring the best financial experts to help you sort out your finances both now and for the future. For instance, a good financial manager will tell you that a credit score is one of the only pictures lenders really look at when rating a line of credit or the interest rate they will charge you for a mortgage loan or another type of big loan. In turn, your financial manager – who can be found online today at numerous web sites offering help for financial planning – is the person who can help you manage debt so you don’t appear to be a high risk to a bank or other lender.

Financial experts help you with lenders

When it comes to lenders who loan you money, there is a view in financial circles that the playing field is not completely level unless you have some knowledge of how the lending game actually works in today’s somewhat overly conservative financial lending environment.

For example, a good financial counselor will help you get a mortgage loan with a banking institution or another type of commercial lender that offers you certain terms and conditions for borrowing. The counselor will explain that the interest rate and length of the loan is either good or bad. They will also warn you that the lender’s goal is to maximize their profit in relation to the risk they perceive; with the view that you will either pay the loan off or possibly default.

At the same time, financial experts reveal that many mortgage loans are brokered by a third-party who evaluates your financial status with the goal to negotiate various changes in your loan so the lenders have a clear advantage if you can’t pay the loan at any point down the line.

So it’s vital that you have someone in your corner who can explain where you stand in terms of your credit score and your ability to borrow money based on your debt. The goal, of course, is to get out of debt so you can have more financial leverage and security.

Finding a path out of debt with professional help

According to the National Score Index, the national average credit score as of 2013 is 690, with regional averages ranging from 670 to 700. In turn, the best score is viewed today as 720 or above so  that you can qualify for the best rates and terms.

For example, a lender commenting online explains that credit scores can be the difference in getting ahead or behind financially. A lower credit score will cost you more money per month for your mortgage. While that doesn’t seem fair, it’s simply a fact of life today, say financial experts.

Overall, the process of managing your debt to improve your credit score is vital in order to get the best rates on financial products such as mortgage loans.

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2 thoughts on “Debt Management Scoring Reveals Practical Data to Save Money

  • Actually I’m surprised the average is as high as 690! Which means, for most, getting the best rate is almost within reach.

    Having a good score absolutely can save you money. We refinanced our mortgage few months back at 3.6% with no almost no closing cost (ok, cost us $150) because our scores were good.

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