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Can Credit Counseling Really Help?
By: Dave Robinson
If you have high debt, and are in trouble, you have probably heard the term
“credit counseling,” but do you understand what it is? Oftentimes this term is
used in the same sentence as debt negotiation or debt settlement, but actually,
it’s a completely different process. With credit counseling, you will actually
work with a professional credit counselor to pay off your debt in lower, monthly
payments that you can afford.
The people most likely to need credit counseling are those who are receiving
troubling phone calls from bill collectors, or whose accounts have gone to
collection agencies. If you think that you may benefit from using a service like
this, please read on to find out the best way to work with a credit counseling
company.
First, you’ll need to be able to find a good credit counseling company, and not
fall victim to one of the many credit counseling scams that are out there. Start
by avoiding any ads that promise you quick fixes for your credit report. There
is no such thing. Instead, look for a reliable company that is accredited by
Consumer Credit Counseling Services.
Next, you’ll have to meet with a professional credit counselor, and provide them
with all of the details of your debt. Don’t be tempted to leave anything out
because they will need the information in order to create a re-payment plan made
just for you.
Now, you can sit back and allow your professional credit counselor to work for
you. They will contact all of your creditors and inform them that you are trying
to create a plan that will allow you pay off your debts. They will work with
them all and coordinate a re-payment schedule that you can live with. Many
times, they will be able to lower your interest rates in order to allow for
lower payments.
Some credit counseling services offer a debt management system. What is it?
Instead of having to keep up with all of the payments yourself, you will have
the option of submitting one lump sum payment to the credit counseling service
and they will do it for you. One note of caution here: there have been instances
of a credit counseling services paying their client’s payments late, and if that
happens, your credit report will suffer for it. Knowing that, be sure to check
out the company thoroughly, by checking references, before signing up for their
debt management program.
What will you pay for all of these services? A reputable Credit Counseling
Service will only charge you a small fee, somewhere around fourteen dollars per
month. If they are asking for alot of money up front, they may not have your
best intests at heart. Be on the look out for potenial scams.
You should also be aware that working with a credit counseling service can do
some damage to your credit report. However, the good does out weigh the bad.
After all, it’s much easier to explain an honest attempt to get your finances in
order than it is to explain a bankruptcy or a credit report full of charge-offs.
About the Author:
If you would like to get more credit information you can visit our website which
contains many credit resources.
www.my-credit-report.info This article is
copyright 2005, but can be freely reprinted, as long as no changes are made,
including hyperlinks.
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