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Who Needs Credit Counseling?
Anyone who has already missed the payment date or the consumer anticipating a possible hardship in near future can benefit from the service. It is always advised to go to a counselor before any negative item enters into credit report. So if you are still current with your accounts and afraid of falling behind, immediately see a counselor to find a suitable way out and protect your credit. Remember, once your creditor takes you to court and wins a judgment, it will be reported as a public record in your credit file and stay there for 7 to 10 years. Before the debt goes beyond your capacity and compels you file bankruptcy, go for credit counseling and stay creditworthy forever. Read the warning signs that help you decide if you need credit counseling or not.
As far as FICO Score is concerned, it does not matter if you are enrolled in credit counseling program or not. FICO scoring model does not count this data. However, your creditors are likely to report your account as under credit counseling or debt consolidation program. There are few lenders that do not prefer credit counseling items on your report. But Debt Consolidation Care Community says that the status definitely shows your interest to pay your bills. So you are going to get privilege in future. Moreover, new bankruptcy law in 2005 has made it mandatory to undergo credit counseling session before filing bankruptcy.
Two types of agencies are there in the market - non-profit and those who work against a nominal fee. Community members frequently ask the question why an agency would work without a fee. The answer is simple: the counseling agencies usually receive a particular portion of the fund paid to the creditor, known as Fair Share.
However, there are few agencies that pretend to be non-profit, but keep a part of consumers' money with them. Beware of such companies. Ask these questions to your counselor:
Is there any monthly charge, set up charge or penalty for leaving the program?
Are these compulsory? A true non-profit firm should not incorporate any mandatory fees.
Work with a reliable agency so that you can get the most out of the service.
It is pretty difficult to anticipate how long it will take to get you out of debt. Several factors work behind it. Let's look at an example: if you pay 0 per month it will take 10 months to repay a 00 loan in full. But, if you decide to pay 0 per month, the repayment period is likely to be doubled. Usually counselors design the program in such a way that you can become debt free within 2 to 4 years.
Non Profit Credit Repair
But most people want to repay their debts and just need a little more time to do that.
Debt and credit counseling services offer professional and timely advice to help save your credit rating, your car, your home, and even your life. What student can afford to be without food and accommodation as they go through college? Only borrow what you can afford to repay in a reasonable period of time. Generally speaking not for profit organizations are cheaper but for profit companies tend to have more qualified staff.
These are called unsecured debts.
These are called unsecured debts. However, your creditors are likely to report your account as under credit counseling or debt consolidation program. Its important that youre as honest as possible about your financial situation and the amount of debt that you owe.
Credit reports often have mistakes on them and you are more than welcome to dispute any items you do not agree with.
Credit counseling companies in a number of states have drawn the attention of the Federal Trade Commissions office which has so far as to shut some of these businesses down completely and others have been fined and threatened with similar action if they do not change some of their practices. Therefore it is imperative that you are fully aware of what is on your credit report. Contact the creditor to see if an alternate schedule of payments can be implemented. Your creditors will have to agree to stop harassing you with collection and court proceedings and you agree to pay so much a month into an account that will pay back all of your creditors. Credit Counseling Companies Credit counseling companies are not always what they appear to be. If you have negative items on your credit report it is wise to start changing your payment habits immediately and start working towards good credit now. |
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