Economics Finance

Credit counseling is by far the most popular debt relief option approached by millions of households who are facing debt problem. However, not all credit counseling services are legitimate; there are even bad companies who provide little or no actual “counseling”; instead, they are in business just to make money from debtors who have suffered financially by getting them to sign up with a debt management plan that comes with huge hidden costs, make their debt situation worse.

Therefore, if you are deciding to approach a credit counseling service to help you in resolving your debt problem, here are a few tips to help in your selection:

Tip #1: Move on if you are asked to sign up a debt management plan right away

When you approach a credit counseling service, a credit counselor will be assigned to work with you. He needs to get understanding on your debt situation and your budget first before he proposes a solution that fits your financial situation. If it is not the case, instead, the credit counselor wants to sign you up right away into a debt management plan without first understanding your debt & financial situation, then move on. Continue reading ‘5 Tips on Selecting a Good Credit Counseling Service’ »

Some people are concerned that consulting a credit counselor will reflect poorly on their credit score. This is just not so. First of all, if you feel you may be in need of credit counseling services, chances are that your credit score may have already taken a hit. There could be delinquencies on your report before you even engage a credit counselor. If that is the case, those delinquencies will remain on your report until time elapses and they are removed in the chronology of things.

The credit counseling service itself reports your conference and, ultimately, your repayment plan to no one. They are sworn to confidentiality.

As the credit counseling agency negotiates your repayment schedule, they will contact your creditors with an offer to accept this arrangement. Your creditors have the option to accept or decline your repayment plan. In the event they accept your offer through your credit counselor, they have the right to make a note of this arrangement on your credit report. This notation in no way affects your credit score, but if you miss payments or are late in keeping up with the promised schedule, such misdeeds will negatively affect your FICO score. Continue reading ‘How Your Credit Score is Affected by a Credit Counselor?’ »