How Do Counseling Services Affect My Credit Score

admin — Sun, 14 Dec 2008 11:02:00 +0000

If you are already underwater with debt, it is likely that your credit score has taken a hit for the worse. When you fall behind on current credit obligations the lenders will report these defaults to the credit bureaus. When people fall way behind on their bills its often impossible to ever catch up.

Debt management programs have been around for years and offer help to individuals trying to get out of debt. How do they work and how will enrolling in one of these plans affect my credit score?

They usually begin by setting up an initial consultation. Here a financial counselor will break down your income, living expenses, debts and discuss strategies to reduce spending and allocate more money to paying off your creditors. At the end of the meeting you are given a budget along with an action summary plan to help initiate your route to financial freedom. Many find that this one time meeting is enough and the advice of the counselor can be handled out on their own. Others see a benefit in actually enrolling in the debt management program.

A debt management plan is a reasonable way to resolve credit problems and get back on track financially. Your financial counselor will act as an impartial intermediary. Based on your income they will negotiate and establish a mutually accepted repayment plan with your creditors. Upon agreement, you make a single payment to the debt management company and they in turn make the monthly payments to all creditors that were enrolled in the plan. Best case scenario is that collection calls stop and ultra high interest charges and fees are reduced or every now and then eliminated altogether.

There are pitfalls to enrolling in the debt management plan. We have experienced many situations where the creditor accepted the plan, stopped collections calls and even reduced the interest but would not report the monthly payment to the credit bureaus as the minimum monthly payment. More than likely the new monthly payment to the creditor is less than what it was before as a result of the restructuring program. Each month the creditor could be reporting you 30 or more days late because of it. You’ll have no way of knowing it unless you frequently monitor your credit report.

If you are one of the many people in need of restructuring your debts be sure that you enroll in one of the credit monitoring plans available through Experian, Equifax and Transunion.

By: John Rasor

Article Directory: http://www.articledashboard.com

www.creditscorecowboy.com/ is your source for free credit scores, credit monitoring, identity theft software your free credit report and a blog with a wealth of information about credit. People around the world depend on us for expert advice on how to maintain a healthy credit score.

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Which Credit Counselor Service

admin — Sun, 14 Dec 2008 11:02:00 +0000

If you are reading this article then you have already made a step in the right direction . Admitting you need help takes a lot and having financial problems can create a strain on you and your relationships. Credit counseling can help get you out of debt and back on track. Many people struggle to find the right credit counselor service.

Profit versus Non-Profit

When looking for a credit counseling service, a person needs to find a non profit service. These organizations are in the business to help people, not to profit off of their misfortunes. They don’t normally have fees and if they do, they are small, and there is more one on one attention.

Getting the Credit

If a service is reputable it will be a member of the Association of Independent Consumer Credit Counseling Agencies (AICCCA), and the National Foundation for Credit Counseling (NFCC). In order to be in these two groups services must have there ISO 9001 certification or Council on Accreditation. These are accreditations that mean that they are complying with all rules of their industry. If a service does not have these or is not a member of these groups, they are probably not the right service for you.

Counselors

The counselors at these services should be certified by groups such as the Associations for Financial Counseling and Planning Education. It is also important that your counselor did not receive a bonus for signing you up for the service. If you wanted a salesperson you would go to a car dealership!

Cost

Most services do not charge, but for those that do, never pay more than fifty dollars for their service. Also make sure that your first month’s payment actually goes towards your bills and not the service. This has been the problem with some companies in the past.

Debt Free…when?

Finally, a good credit service will have you debt free in five years (in most circumstances). Make sure you are aware of how they plan on doing that, and request monthly statements showing your progress.

By: L. Sampson -

Article Directory: http://www.articledashboard.com

Visit Debt Sanity to view our Recommended Debt Consolidators online. Also, visit Debt Sanity for more information on Counseling Credit Debt Services.

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