Credit counseling can be very helpful for some consumers who find themselves in debt trouble. For many consumers, simply having a third party to talk to (about their financial issues), is a great help; but do keep in mind that there is a difference between credit counseling and credit repair programs – they are not one in the same.
Depending on where you live, finding credit counseling is fairly easy. If you live in a metropolitan area, your chances of finding a reliable and knowledgeable credit counselor are better than if you live in a rural area. A good place to start, is with local non-profit agencies; many of these offer free or very low-cost credit counseling services.
These types of credit counseling agencies will work with you to help you better understand where you are financially, and offer some guidance as to what can be done to improve your situation. In many cases, they offer free educational materials and workshops to help you establish a budget that meets your needs and circumstances. Go to removedebtfast.org/methods to get a better example of what a credit repair program is.
With this type of counseling, you can begin to take hold of your financial situation by learning effective ways to budget your money (and reduce spending) – you can also get a clear understanding of how to keep (present and future) debt, within your control.
In addition to this, credit counseling agencies may also be able to help you draft letters to your lenders. Many agencies have pre-drafted letters that they can share with you.
In addition to the aforementioned points, there are some important and distinct differences between credit counseling and debt repayment plans that are offered by commercial companies; this is especially true in regard to the long-term effects of your credit.
When you take advantage of credit counseling, there is no signed agreement or legal commitment, none of your accounts are affected by the counseling agency and you maintain overall control of how your debts are paid – and when they are paid. Credit counseling does not affect your credit rating and does not show up on your credit report.
However, because there is no legal or signed commitment, the credit counseling agency leaves the payment of your debts, up to you – which may leave you exactly where you started, if you are not taking some form of constructive action. Credit repair companies, on the other hand, may take a few liberties on their clients behalf, and if they know what their doing, can lead to favorable results (provided they have the full cooperation of the client); removedebtfast.org/help is a perfect example of this type of credit repair service.
Credit counseling could be a great option to consider if…
- You can’t pay the minimum balance on your credit cards.
- You’re always late on payments (one or more of your regular bills).
- Creditors and collection agencies are constantly harassing you.
- Your efforts to compromise with creditors, are repeatedly met with failure.
What Credit Counseling Services Can Do For You
A good credit counseling service will concentrate first on finding out where you are, financially. They will look at how much income you have coming in, and how much you have going out. This is where the initial problems can often be corrected. A qualified credit counselor will be able to negotiate your current debt balances with your creditors. You may even find that you are eligible for a debt consolidation loan – a method of debt settlement, that allows you to roll all your outstanding balances, into one personal loan.
By having the credit counseling services do this, they should be able to negotiate a lower interest rate for you, consequently saving you money and reducing your monthly repayments. Credit counseling companies can also provide you with invaluable advice about your spending patterns, and how to actively control your debt. A good credit counselor will also help you avoid the temptation of opening up new loans (to gain credit), and will offer ideas to raise your credit score.
Debt settlement programs, like professional credit counseling services, are critical tools for those struggling with huge amounts of debt. Paying off debts improves your credit score, and having good credit is essential when looking to buy or rent property, purchase a car, start a business and even establish utility services.
Your credit score affects many aspects of your life, so it’s best to leave consumer debt settlement up to a professional credit counseling service. The end result, is relief from debt and it will make the rest of your life much easier! Under certain circumstances, a case can be made for a credit repair company, if the client wishes to have a less hands-on approach, on their end – go to http://www.removedebtfast.org/methods/quick-fix for more information on credit repair.
Overall, the credit counselor should first analyze and understand your credit situation, draw up a workable solution for you (to get rid of your debts), then motivate you towards reaching your financial objectives. This is the primary responsibility of a good credit counselor. It’s one thing to negotiate interest rates, but to actually help you focus on the financial goals ahead (and keep you on track), is what separates an ordinary credit counselor, from a good one!