Are you in need of credit counseling?
Many people have found getting credit to be easier than keeping up with it once they have it. If you find yourself in financial trouble, credit counseling may be the choice for you.
Why are my "easy to manage" monthly payments not so easy to manage?
One monthly payment may or may not be easy to manage. Three or four are not likely to be. Credit counseling can help you avoid situations that leave you overextended.
I have decided I need credit counseling, where do I begin?
There are nearly as many companies offering credit counseling as there are offering credit. A decision like this is important, and can affect your future profoundly. Try to find a counseling agency that specializes in the type of problems you have.
How do I know I'm getting honest counseling?
Always ask for accreditation. A credit counseling service should be accredited by an independent agency. They should also be non-profit.
What does credit counseling cost?
Most credit counseling services charge either an enrollment fee, a monthly percentage based on your payments, or both. These costs are typically much less than what you could wind up owing if high interest debts remain unaddressed.
Will this help with all my debt?
A non-profit credit counseling service should have no problems consolidating all of your debt for you. Be wary of credit counseling services that refuse to help with all of your debt. They may be receiving contributions from the people you owe money to.
How will this affect my credit report?
Credit reports are prepared for creditors from information provided by other creditors. The point of credit counseling is to lower your actual debt. In time your credit report will improve as creditors have less negative things to report.
Does this mean I have to declare bankruptcy?
Bankruptcy should always be considered a last resort. Credit counseling is an alternative to bankruptcy, one which doesn't involve the legal issues or stigma of bankruptcy.
Will this help my credit rating?
When all items are removed, yes, your credit rating will rise. Don't expect it to happen within weeks or months, sometimes it may take a few years. Credit counseling service can remove or change factual information from your credit report. Inaccurate information can be disputed and removed, factual data remains for seven to ten years.
What's the difference between credit counseling and debt consolidation?
While credit counseling may include a debt management program that allows you to make one payment or many, it is not the same as debt consolidation. Debt consolidation usually refers to a loan, and may result in lower monthly payments, but will mean paying a higher total amount in the end.
What about a home equity loan?
A credit counseling service would not be likely to recommend this step. Again you would lower your monthly payments, but without changing your spending habits, you may just wind up in deeper debt. The equity in your home is an important nest egg that should be used to improve your financial situation, not just to maintain it.
In the end, credit counseling is about helping manage your debt on your own. Through reeducation, and a systematic method of budgeting, credit counseling could save you from debt and the drastic step of bankruptcy.