Freedom Through Financial Education
Many people have questions about credit counseling and debt management. At Cornerstone Financial Education, we understand that selecting an organization to work with is a big decision. We are more than happy to answer any questions you might have.

Credit FAQs

  1. My credit card balances seem to be going nowhere every month but my credit report says I have good credit. How does this work?
  2. How long does it take to pay off my credit card debts and bills after debt consolidation?
  3. Is your debt management program expensive?
  4. Do I need a credit report to consolidate debts?
  5. Will a debt management program affect my credit rating?
  6. Why is credit important?
  7. Can credit save me money?
  8. Can credit help me get a job?
  9. What is the difference between my credit report and my credit score?
  10. How do I find out what my credit is like?
  11. How can I fix my credit?

If you have a specific question or want more information, please contact us at 1-800-336-1245.

  1. My credit card balances seem to be going nowhere every month but my credit report says I have good credit. How does this work?
    Keeping your credit card payments current is important. But national statistics tell us that for debts over $5,000, it takes over one year to pay off creditors for every thousand dollars owed at a 20% Annual Percentage Rate. At that level of debt, sooner or later your debt will overcome your ability to pay your bills on time. Your credit ratings may eventually deteriorate due to debt-to-income ratios. The higher your debt-to-income ratio, the more trouble you are in financially. To determine your debt-to-income ratio, divide the amount you owe by the amount you make each year. So if you make $30,000 and owe $15,000, your debt-to-income ratio would be 50%. If your debt-to-income ratio is 50% or higher, you need debt management.
  2. How long does it take to pay off my credit card debts and bills after debt management?
    Most people are able to get out of debt in three to five years after the interest rates on their debts have been reduced under a debt management plan.
  3. Is your debt management program expensive?
    No. We charge a small management fee which is included in your monthly payment.
  4. Do I need a credit report to consolidate debts?
    No. We work with the creditors that you tell us you owe. However, it’s always a good idea to have a credit report even if you’re not thinking of consolidating your debt.
  5. Will a debt management program affect my credit rating?
    If you have not missed payments, you may still have a good credit rating. But if you realize that you will never be able to get out of debt by paying only the minimum amount every month, you are in financial danger. Once you have started a debt management counseling program, your credit report will show a remark such as "under debt management" or "managed by credit counseling.”
  6. Why is credit important?
    Although credit is most often associated with credit cards, credit is much more than the card itself. Credit provides opportunity. Credit can be used to invest in a home, purchase a car, and even start a business. These types of purchases are rarely paid off in one lump sum payment. Because of that, you need good credit to be able to take advantage of these types of opportunities.
  7. Can credit save me money?
    Absolutely. Your credit rating is the biggest factor used to determine the likelihood that you will pay your bills on time. Consequently, if have good credit, a company will consider you a better prospective client. You can look forward to saving money on:
    • Security deposits for utilities and rentals
    • Auto insurance
    • Health insurance
    • Interest on subsequent loans
  8. Can credit help me get a job?
    Although good credit itself won't get you a job, many employers today are checking credit to determine your trustworthiness and responsibility. Having a poor credit rating can subject you to personal questions regarding your finances and can even mean not getting the job.
  9. What is the difference between my credit report and my credit score?
    Your credit report is a comprehensive report that includes the following items:
    • Your current and previous addresses.
    • Your current and previous employers.
    • Public records such as bankruptcy filings and tax liens.
    • Your credit history including detailed payment history for current and previous accounts.
    Your credit score is a number that can range from 350 to 850. Five factors make up your credit score: payment history, amounts owed, length of history, new credit, and types of credit. These five factors are each given different weights in an equation to produce your credit score:
    • Payment history - 35%
    • Amounts owed - 30%
    • Length of history - 15%
    • New credit - 10%
    • Types of credit - 10%
  10. How do I find out what my credit is like?

    11. You are allowed a free credit report from each of the three main credit reports once per year. You are also allowed a copy of your credit report if you have been turned down for credit. You should contact each of the credit reporting agencies listed below and request a free copy of your credit report.

    The three main credit reporting agencies are:

  11. How can I fix my credit?
    Fixing your credit can be simple. First, make sure that the information on your credit report is correct at all three of the main reporting agencies. If any of the information is not correct, you can dispute the incorrect information with the credit reporting agency that has the wrong information. Once your credit report accurately reflects your credit history, you will want to follow some basic guidelines to help improve your credit score.
    1. Pay your monthly bills and statements on time, every time.
    2. Pay down your balances as soon as possible by paying more than the minimum payment on credit cards. If you pay only the minimum balance on a credit card it can take years to pay down your balances. Even though it may take a little while to pay off your balances, while you are paying down your debt, you'll be creating a positive payment history that will also help your credit score increase.
    3. Don't use more than 30% of your credit limit on any credit card. This shows that you don't need all the credit that has been offered to you. You need to stay somewhere between 0% and 30% of your credit limit.
    4. Don't open too many credit card accounts. Ideally, a mix of three credit cards, an auto loan, a student loan, and maybe a mortgage is what you want. Too many open accounts can also limit your ability to borrow in the future.
    5. Don't be seduced by credit repair scams. Make sure you check with the Better BusinessBureau, www.bbb.org, to find out about any company that you are considering hiring to help you repair your credit or consolidate debt.

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