Maybe you feel like you are almost drowning in debt. Perhaps you are living paycheck to paycheck and barely able to make the minimum payments required by your various creditors each month. Student loans, car payments, credit card debt, mortgage payments – it can all add up to be an overwhelming situation. As a result, you may wonder if bankruptcy is the only way out. But before you take that drastic step, it may be wise to consult with a certified credit counselor at a credit counseling organization. A credit counselor associated with a credit counseling agency can look at your options and determine the best path forward.
What Are Credit Counseling Services and How Can They Help Me?
Credit counseling is a financial service that can help people with financial difficulty (such as not being able to make their credit card payments or mortgage payments) become more financially stable. Credit counselors can work with creditors to negotiate lower interest rates, reduced payments, and eliminate late fees. This process can be a way to consolidate debts and end up with lower monthly payments. Credit counselors can also speak with you about the details of your entire financial situation (including how much debt you have). They can help you look at your financial goals and help determine the best debt management plans for you based on your situation.
How are credit repair and credit counseling different?
These two services can be easily confused with each other. But they are two different and distinct services. If you need help managing your finances, it is crucial to know the differences and to decide which type of service is most appropriate for your situation.
Credit repair is a service that can help an individual improve their credit score as shown on a credit report. Maybe they have a history of bankruptcy, late payments, foreclosure, or have had debts turned over to debt collectors agencies. Credit repair can help you improve your credit report by requesting the removal of inaccurate negative items on your credit report. This process may help you rebuild your credit score. With improved credit, it will be easier to get new lines of credit, a car loan or mortgage, valuable credit cards, and other types of loans in the future with lower interest rates.
On the other hand, credit counseling is for people who are struggling financially and need some assistance finding a way out of their hardship. The main goal is not to immediately increase a person’s credit score but to help them with debt management.
Why should you consider the help of a credit counselor?
Suppose you are a borrower and have already fallen behind on payments for your credit card, home mortgage, auto loan, student loan, or other debt. In this case, right now may be the right time to reach out to a certified credit counselor. There are several vital tasks that a credit counseling service can help you with:
- Help you get a sharper idea of your entire financial situation.
- Negotiate with your creditors to get them to agree to lower your monthly payment, interest rate, repayment terms, and fees.
- Create a debt management plan with instructions on how to pay off the remaining balance of your debts, sometimes interest-free, over a certain amount of time.
- Help you consider your alternatives regarding bankruptcy and other debt-relief solutions.
- Help you reorganize your finances to create a budget plan that is right for you.
- Help you make sure all of your creditors are being paid on time so that you will have fewer calls/letters from them in the future.
Where Can I Find A Reputable Credit Counseling Agency?
There are numerous options when it comes to credit counseling agencies. You could check with a financial institution in your area for recommendations on credit counseling agencies. Alternatively, a quick internet search will probably provide you with a wide selection of credit counseling services. When selecting a credit counseling organization, make sure that you do some research to make sure they are a reputable organization. You may want to check with the Better Business Bureau to find out more about the reputation of the specific debt counseling organization. In addition, the Federal Trade Commission offers some great tips and questions to ask when considering a credit counselor.
How Much Will Credit Counseling Cost?
What you pay for credit counseling will depend on the type of services you need and the type of credit counseling agency you choose. For example, if you want to come up with a budget plan and get some advice on dealing with your debt problems, you may be able to find free credit counseling. On the other hand, there may be a cost involved if you need help negotiating with your creditors or are interested in consumer credit debt consolidation and debt settlement programs. Ask your prospective debt counseling agency what they include in a free credit counseling session and what credit counseling services have associated costs. Many credit counseling organizations operate as nonprofit credit counseling agencies.
The goal of credit counseling is to guide you toward a solution that works for you. For some people, the advice and assistance they receive may be all they need to get their finances back on track. For others, the solution may be working with a debt consolidation service or another agency that can provide debt relief. The goal is to develop a debt management plan that works for you and moves you toward your financial goals.
Think about your current situation and how much longer it will take you to pay off your balances if you keep making your regular monthly payments. Then, consider whether it would be better to work with a credit counselor to reduce your debt or help you develop a plan for paying off your debts.
With the help of credit counseling, your financial future can be bright! Partner with a good credit counseling agency. Commit to your credit counseling sessions. Work together with your credit counselor to develop a debt management plan. Use debt settlement or other debt solutions that make sense in your situation. Then, begin your journey toward financial wellness!