On a daily basis, consumers are barraged by offerings from companies claiming they can turn their dismal credit histories around and help them achieve higher credit scores. For a fee, they promise to clean up a consumer’s credit report so they can obtain a car loan, a home mortgage or insurance. The truth is, many of these promises are empty and some are downright scams. While some services are beneficial to consumers, many can actually cause more harm than good.

The Warning Signs

When trying to determine whether a company is offering a valid, constructive way to help you manage your debt problems or it is an unscrupulous operation; consider it a red flag if a company:

•Offers credit repair services and collects up-front fees, prior to providing services of any kind.

•Doesn’t advise you of your legal rights and what you can accomplish on your own - without paying a fee.

•Recommends that you not contact a creditor or credit reporting agency directly.

•Suggests you try to invent a “new” credit identity whereby you apply for an Employer Identification Number to use instead of your SSN.

•Advises you to dispute all negative information in your credit report whether or not accounts are accurately reported.

•Insists or implies that they have the magical ability to remove negative “accurate” information

Can you beat the creditors at their own game?

There is a new product available that might help level the playing field -just a bit. Arc Systems, a leader in automated underwriting software, recently launched Debt Logistics, a new product that promises to teach consumers how to better handle their credit card debt. Mark Jones, Vice President at Arc, promises that Debt Logistics will be an effective tool which will set them apart from the countless debt restoration and credit repair services currently on the market. Without having to supply personal information such as actual account numbers or the names of financial institutions, consumers can plug in their current rates of interest and balances due along with their actual current payment structures and view how long it will actually take them to pay off their current debt. The system does all the strategizing and calculations for the user, then suggests how best to optimize payments on the consumer’s current debt, ultimately shaving off years of time –and costly interest.

According to Jones, “The credit card companies are not evil. They simply have created the perfect business model. They loan money to just about anyone that wants it, in a society whose hunger for consumption never seems to end. They make their terms and agreements ambiguous (that's being polite), and the repayment of the cards so confusing that many financial planners and CPA's don't even know how the money is applied to the credit cards when you make your payments.”

As many know, most creditors apply different rates of interest to the debt we carry on any particular card. They calculate the interest rates on the debt by splitting them up into different categories; one rate for purchases, one for cash advances and the third for transferred balances. What most people don’t realize is that any payments made by the consumer are first applied to the category that carries the lowest rate of interest, and until that particular debt is paid off, nothing gets applied to the remaining debt. The result? The debt remaining in a sub-category assigned with a higher interest rate continues to be charged the higher rate of interest while the balance isn’t reduced. Hence, it takes much longer for the debt to be paid off – and the consumer is typically none the wiser.

Remember, credit card companies are playing a game in which they create the rules, entice you to play, and then hedge their bets that you'll remain complacent and never take the time to learn the rules yourself. They bank on the fact that you will continue to spend money and use your cards, make payments, complain that the balances never seem to diminish, yet do nothing but throw more money at the problem. These are very smart companies that have built multi-billion dollar businesses not on risk, but on financial behavior. So far, they've been right.

What differentiates Debt Logistics from the many unethical debt repair and debt restoration services out there, just might be what Debt Logistics doesn’t promise. They don’t promise to remove derogatory information from your credit report, nor do they promise to contact your creditors or “remove” or “repair” your debt. Rather, they offer you a tool to learn how creditors manipulate your interest rates, and how best to optimize and handle your current debt. The best advice I can give someone is to learn the rules of the game and consider the best strategy for handling your debt. Most people, including myself, have been guilty of stopping short of thinking the problem through in a methodical way.

If you would like to test drive Debt Logistics, please email me. Considering the overwhelming number of foreclosures and the economic hardship created by massive amounts of unmanageable personal debt, a product that teaches people the optimal way to manage their current debt is worth taking a look at.

Author's Bio: 

Denise Richardson is a freelance writer, consumer advocate and Author who turned her life experiences into her first book in order to humanize and expose the damaging effects of identity theft, inaccurate credit reporting, mortgage servicing fraud and abusive debt collectors. Richardson is a member of the National Association of Consumer Advocates and holds a seat of the Board of Directors with American Consumer Credit Education Support Services, a non-profit organization dedicated to educating consumers, and responsible businesses, on issues such as privacy rights, credit reporting, and financial fraud.