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Is Credit Counselling Right For You?
- Published: February 5, 2011 by Umma Queenan Comments (0)
Credit counseling can be an effective way to deal with a debt problem. However, it is not the best solution for everybody. It is important to know who should and who shouldn’t consider credit counseling. Your situation will determine whether or not credit counseling is the right choice for you.
The first thing that you need to know about credit counseling is that it will have a serious impact on your credit rating. A lot of people believe that credit counseling is a way to avoid hurting their credit. This isn’t true. Credit counseling is a serious black mark on your credit report. When lenders see credit counseling on your credit report, they know that you have had trouble paying off your previous loans.
They will not unreasonably believe that you will have trouble paying off future loans as well. In fact, a lot of lenders are more willing to lend to somebody with a discharged bankruptcy than to someone in credit counseling. For most people, credit counseling is still a better option than bankruptcy, but you have to remember that it will have at least as serious an impact on your credit.
Most credit counselors will negotiate with your creditors to reduce the amount that you owe. Usually they do this by negotiating for lower interest rates. This can make it easier to make your payments, but it will also hurt your credit rating. Some credit counselors will also allow you to make one payment to them, and then they will pay to make payments to your creditors. This service can make it easier for you to make payments since you only have to make one monthly payment, just remember there will be a fee for this service.
Your credit counselor should also help you to work out a monthly budget that will allow you to get out of debt. This is one of the most valuable services they offer and something that you should pay very close attention to. Your credit counselor will help you to avoid getting back into debt trouble in the future.
Credit counseling is not a quick fix to your debt problems, and it is not a solution for everybody. Generally, if you still have good credit and are able to pay your bills each month it probably isn’t for you. If you are having trouble making your payments or have already damaged your credit then it may be a good idea to look into credit counseling.
Image: by _Dinkel_
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