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The Pros and Cons of Paying Someone To Fix Your Credit



utah778 / Getty Images/iStockphoto

utah778 / Getty Images/iStockphoto

Having a poor credit score can be a major hindrance when you are trying to open a new line of credit, whether it be a new credit card, car loan or mortgage. If you’re in this boat, it’s likely you want to improve your credit score ASAP to be able to move on with your financial life. Credit repair services promise to do just that — but there are costs associated with these services, so they may or may not be worth it for you to use. To help you determine if you should consider using a credit repair service, take a look at some of the pros and cons.

Read More: 30 Things You Do That Can Mess Up Your Credit Score

Pros of Using a Credit Repair Service

Here are some of the reasons why using a credit repair service may be right for you.

1. It’s easier and quicker than trying to repair your credit on your own.

“Companies that specialize in credit repair save you the time and hassle of trying to do it yourself,” said consumer and money-saving expert Andrea Woroch. “They have stronger negotiating power and work with your creditors to consolidate and reduce your outstanding debt.”

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Credit repair services may be able to boost your score more quickly than you would be able to do on your own, which could save you money in the long-term.

“While you may end up paying around $100 per month for credit counseling services, they can sometimes end up paying for themselves — and then some,” said Tony Wahl, director of operations at Credit Sesame. “In some cases, credit repair services can help repair your credit faster, which means that you can start benefiting from having a better credit score sooner. This can include lower interest rates, which can help save you even more money in the long run.”

2. A credit repair service will show you exactly what’s causing your credit issues, which can be helpful if you’re unsure why your score is low.

“These services can help you figure out what exactly is wrong with your credit, even if they can’t fix them,” said Jack Cunningham, founder of the personal finance blog Nickel & Dime Decade.

Paying in Full vs. Partial Payments: Which Is Best for Your Credit Score?

They can also help you understand what needs to be done to improve your score.

“If you’re unsure where to start, credit repair services are a great resource and can provide you with a personalized plan,” Wahl said.

3. It may the push you need to improve your credit if it’s a process you’ve been putting off.

“There’s nothing these companies will do that you can’t do yourself, but you also have to be willing to do it,” Woroch said. “If you don’t take steps — and haven’t taken steps thus far — hiring a professional and paying some fees may be worth it to finally repair your past credit mistakes.”

Cons of Using a Credit Repair Service

For some people, the cons of using a credit repair service may outweigh the pros. Here’s a look at the drawbacks of hiring someone to fix your credit.

1. These services sometimes charge high fees.

If you’re already struggling with your finances, hiring a credit repair service may just add to your already existing debt.

“Many people can’t afford the $70 a month or more that these services cost,” Cunningham said.

2. It’s not an instant fix.

“Some credit issues that are years in the making take years to fix,” Cunningham said. “These take work on your behalf, and credit repair companies can’t instantly fix these issues.”

3. Some ‘credit repair services’ are scams.

“Before making the decision to hire a credit repair service, be sure to verify that the agency you’re working with is reputable,” Wahl said. “Most legitimate agencies are nonprofits and members of either the National Foundation for Credit Counseling or the Financial Counseling Association of America, so be sure to check for the appropriate accreditation or certification. It’s also worth noting that ‘nonprofit’ doesn’t always mean ‘free,’ so be sure to do your research before making a decision to find what’s best for you.”

4. You can fix your own credit for free.

“It is important to know that you can work to repair your credit on your own with the same tools that a credit repair agency would use,” Wahl said.

Find Out: 90-Second Moves To Raise Your Credit Score 200 Points

Allyson Dennen, an accredited financial counselor and CEO of Fab Life Now, advises against using credit repair agencies. Instead, she said to be vigilant about monitoring your own credit and report issues yourself.

“Check each report one time per year at and then dispute any mistakes or issues you see,” Dennen said. “All consumers can easily dispute items on their credit directly with each of the three credit bureaus. To make it even easier, once you dispute an item and the bureau finds it is in fact a mistake or needs to be removed, they have the legal obligation to report this change to the other two bureaus on your behalf.”

Did You Know: Will Opening a Checking Account Hurt Your Credit Score?

Even if there are no mistakes on your report, there are other steps you can take on your own to improve your credit score that don’t require professional help.

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Are Sallie Mae Student Loans Federal or Private?



When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances



Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

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A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit



Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.



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