Do you need Credit Counseling?
If you are looking for someone to work with you on your credit problems this is a definite option. However if you are someone who can pay there bills and debts on time you don’t need a credit counselor. Credit counseling is meant for those that are behind on there bills and living on a lot less than the norm.
With that said there are a few things to watch out for when looking for a credit counselor. Such as do they have proper accreditation’s or are they one of those fly by night companies.
Second, do they have big up front fees. Usually Credit Counseling services will charge around a $10 set up fee. Unless you are getting extensive coaching you are overpaying.
Third, watch out for false promises these companies may claim just to get your business. Things like being able to pay your debts off with little or no money, or claim your credit rating will improve quickly. Don’t fall into this trap of big promises and no results.
If you are looking for a credit counselor make sure you look at the Association of Independent Consumer Credit Counseling Agencies. Here you will find accredited credit counselors that you can choose from and get more info in needed.
So here are a few advantages and disadvantages to doing credit counseling.
Advantages
1. Stops creditor harassment. Usually once you have someone helping you the phone calls and letters from the collections agencies will stop. Although I wouldn’t put it past them to keep trying. I knew people who did this for a living and they will employ about any tactic to get a hold of you even if you have a credit counselor helping you.
2. Some creditors may agree to lower interest rates. This isn’t always a guarantee but sometimes it does happen.
Disadvantages
1. Significant damage to credit. Your credit will go down the tubes usually by doing this. In fact a lot of banks will often treat the reporting as a chapter 13 bankruptcy. Which means if you are trying to get a loan you may not be able to. It all depends on the lender. Some will be fine with it others will not.
2. Takes around 5 to 10 years to complete a consumer credit counseling program. It is shorter than if you just paid the minimum balance on your credit cards which could take years to do.
3. You must pay back 100%. This includes usually everything. The principle and the interest. This is one of the biggest down sides of the program. If you are looking for a lot of slack from paying your bills you probably won’t get it. Which leads me to my last disadvantage.
4. Little reduction in your payments. If you are looking for your payments to drop you probably won’t see much of a drop. So if this is one of the big reasons you are looking at getting into the program don’t expect them to drop much. However if someone is claiming they will drop your payments by huge amounts watch out. Make sure you check there accreditation’s.
Finally, are you thinking about going through consumer credit counseling? Have you gone through it before? What are your thought? Is it worth it or not?
I’m interested to hear what your thought on consumer credit counseling are.