The consumer credit counseling business is a huge industry in America, since the average American is a mere three paychecks away from facing huge, potentially devastating financial difficulty. Each year, more than a million Americans turn to credit counselors to try to help themselves regain control of their financial burdens. But just how the credit counseling business works is a mystery to most consumers. What’s involved when you hire a credit counselor?

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It may come as a bit of a shock, but the first thing you need to understand is that consumer credit counselors don’t work for YOU! That’s one reason their ads on television, radio, and in your email box shout, “Our services cost you nothing!” However, any business needs to derive income from somewhere, so if they’re not charging you, who does pay them? In truth, they work for the lenders. Here’s how it works:

Regardless of what their commercials would have you believe, credit counselors don’t renegotiate the overall amount of your debt–that is, the total principal balance you owe to your creditors. Instead, they negotiate with the various lenders to decrease your interest rates. For instance, let’s say that you’re paying somewhere around 18 percent on the charge card you want help with (some stores still charge as much as 21 percent). A credit counselor will contact the cardholders and negotiate a lower interest rate–sometimes as much as half the original rate.

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That’s the good news. The not-so-good news is that your minimum payments will still be based on a 90/10 split, meaning that 90 percent of your monthly payment will still go toward paying interest on the card. That means, as is the case with any credit card payment, it will be well worth your while to pay a little more than the minimum each month, in order to whittle down your principal. It will save you significant amounts of money in the long run.

But how can credit card companies continue to make money by cutting interest rates in half, and what do they have to gain by doing so? The first reason is because they know that it’s better to get something, which they’ll do if you continue to pay them, even at a reduced interest rate, than to risk having you default on the entire amount. The second reason is because, even at the reduced rate, the lender is still making a healthy profit. They have borrowed that money at a significantly lower rate–sometimes as much as 66 percent less than the rate they’ll be charging you. (That’s why the financial institutions have big buildings; they make huge amounts of profit.)

Credit counselors CAN save you money, there’s no doubt about that. But don’t be fooled into thinking that they work for YOU, because they don’t. In the end, credit card companies love credit counselors, because the counselors truly work for them. That’s why you don’t pay for credit counseling services. The credit card companies are happy to pay them for you.

Copyright © Jeanette J. Fisher.

Jeanette Fisher teaches how to get out from under credit card debt, how to use credit to make money, and six ways to build strong credit to finance your first home and multiple investment properties. For a free credit advice and free ebook “Credit Tips for Mortgage Financing,” see http://worryfreecredit.com.

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Loans are one of the best sources to finance your cash needs. UK loan market is filled with infinite number of loan options that aim to meet the diverse needs of borrowers. You too must have taken a number of loans or used credit cards at many occasions. It’s good if you have used them wisely and paid them on time. But, if you have defaulted on loan or missed a credit card payment, then your credit report will reveal that you have an adverse credit. An adverse credit is an evil if you don’t know how to get out of it. An adverse credit debt consolidation can help in managing your debts effectively and ensures freedom from debts.

First of all, you need to understand the fact that you are not the only one who has an adverse credit. It is estimated that one in four people in the UK would be turned down by a mainstream, high-street lender just because they have adverse credit. Accept the reality that you have an adverse credit but don’t get drowned by the fact, try to find the solution. The best way to tackle a solution is to face it boldly and not to run away from it. In such cases, an adverse credit debt consolidation can do wonders for a debtor.

Adverse or bad credit with whatever name you may call it connotes a poor credit rating. The term adverse credit embrace mortgage arrears, defaults, County Court Judgments (CCJs), bankruptcy, Individual Voluntary Agreements (IVAs) and house repossession. A borrower can get his/her credit report from any of the credit rating agencies namely Experian, Equifax and Transunion. Credit report is a report containing details relating to the credit history and current status of a borrower’s credit standing. A FICO score of 620 or below is considered to be bad by the lenders. There is risk involved in lending money to people with adverse credit history, because they may make default on payments in future too.

But, the increasing number of default and bankruptcy cases shows that more and more people are getting trapped in the vicious circle of adverse credit. Loan providers now understand the fact that to err is human; a person may miss to make a payment due to some personal financial crisis. Thus, keeping this in mind, lenders offer adverse credit debt consolidation loan to borrowers to keep them away from the stress involved in dealing with a number of lenders.

A borrower can apply for either a secured or an unsecured adverse credit debt consolidation loan. Usually, adverse credit debt consolidation loans are secured loans, which are secured by a borrower’s collateral such as a property or a home.

An adverse credit debt consolidation loan works as an effective management tool; it is designed specifically for people with bad credit rating. An adverse credit debt consolidation loan will consolidate all your debts into one manageable and affordable loan at better rates. The lender will deal with all your creditors and you will be accountable to only one low monthly payment on the single loan. You can also look for debt consolidation help and debt counseling services offered by several adverse debt consolidation loan providers. Loan advisors can give you useful advice to help you get out of debts as soon as possible. A borrower with an adverse debt consolidation loan can borrow any amount ranging from £5,000 to £250,000.

Online lenders can offer you better deal than traditional lenders. The process of applying for an online loan is simple and fast. Borrower just needs to fill up a small application form and then the lenders analyse the application form to find the appropriate loan for the loan applicant.

Don’t choose the very first loan offer you get. Search for the various lenders and collect loan quotes from them which are available for free or for nominal charges. Loan quotes can be compared on the basis of interest rate, loan term, repayment options, loan amount and the fees charged by the lenders. Thus, predefine the features you are looking for in the loan, this will help you in making smart decision which will prove to be fruitful in the future.

A financial crisis can happen in anybody’s life. One may fail to make loan repayments in such circumstances and this may lead to your name getting listed in the books of bad credit. An adverse credit debt consolidation can help you get out of the debt trap. But, what is important is to learn from past mistakes otherwise you will remain ensnared in the vicious circle of debts your whole life.

Rick Russell has no formal degree in finance, but years of work that he has put in the finance industry makes him perfectly eligible to be called an expert in financial matters. To Find Adverse Credit debt consolidation, UK Debt consolidation Help, Fix your debt Repayment visit http://www.fixyourdebts.co.uk/