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What Is Credit
Counseling
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If you are in trouble financially, 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 credit counselor to pay off your debt
in smaller, monthly lump sum 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 the following outline of the best way
to work with a credit counseling service.
First, you’ll need to be able to identify a good credit counseling service,
and not fall victim to one of the many scams that are out there. Start
by avoiding any ads that promise you quick fixes for your credit report-quite
simply, there is no such thing. Instead, look for a reliable company
accredited by Consumer Credit Counseling Services.
Next, you’ll have to meet with your credit counselor, and provide them
with all of the details of your debt. Don’t be tempted to leave anything
out because he or she will need that information in order to create
a workable re-payment schedule for you.
Now, you’ll get to sit back and allow the credit counselor to work for
you. They will contact all of your lenders 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. Oftentimes, 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 missing
their client’s payments, and if that happens, your credit report will
suffer for it. Knowing that, be sure to check out the company thoroughly
before signing up for their debt management program.
What will you pay for all of these services? A reputable company will
only charge you a small fee, somewhere around fourteen dollars per month.
That’s another way to know if you are dealing with a scam operation—if
they want a lot of money up front, it’s almost a guarantee that they
don’t have your best interests at heart.
You should be aware that working with a credit counseling service can
do some damage to your credit report. However, for most people who are
at the stage in their financial lives who would even consider such a
move, would most likely benefit from it. After all, it’s much easier
to explain away an honest attempt to get your finances in order than
it is to explain a bankruptcy or a report full of charge-offs.
About The Author:
Peter Dobler is a veteran in the IT business. His passion for experimenting
with new internet marketing strategies leads him to explore new niche
markets.
Read more about his experience with credit and mortgages; visit
Credit
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