Monday, 24 Sep 2012
The phone rings and you dread the call. You already know that you owe money to more people than you can count, you don’t need another reminder. If you’re finding it increasingly difficult to pay your bills, and pay them on time, it may do you some good to get credit counseling. Before you set up a meeting with a credit counselor, there are a few things you may benefit from knowing in advance.
1. Is Credit Counseling for You?
Before you to take the plunge and start searching for a credit counselor, you will need to decide whether you will benefit from the experience or not. Many factors come into consideration when trying to decide if credit counseling is right for you. The main idea, however, is that you are not properly handling your finances. If you have been making late payments, or see yourself having to make them in the future, you may benefit from a little credit counseling. Taking actions such as transferring balances from one credit card to another, or taking out cash advances to avoid late payments, could indicate that you are in need of credit counseling to help you from falling deeper into financial ruin.
2. What to Expect
When you attend a credit counseling session for the first time, be prepared to bring a lot of information. You will need to inform your counselor about all aspects of your financial situation. This will include information such as amounts you owe on loans, bills, interest rates, and how much you make each month. These details will help your counselor to get a feel for your position and get a plan started. Credit counselors will give you advice on how to budget, lay out your options, and help you to set up a plan of action.
3. Avoiding Scams
If you’re having financial problems, the last thing you need is to be involved in a scam. In order to avoid a scam, it is important to check on a company’s credentials. Seek a company that is affiliated with the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA). The Better Business Bureau will be able to tell you about any complaints against a company, which is another way to help avoid a scam. Also, as a general rule, if a company’s claims are too good to be true, they probably are.
4. Declaring Bankruptcy
If you are seriously in trouble with your finances, it may be time for you to think about bankruptcy. Declaring bankruptcy will be tough, and it should be avoided if possible. Fortunately, credit counseling is available to anyone who is in need of help with their finances. It can be of extra help to those who are running out of options. As a matter of fact, credit counseling is a requirement of bankruptcy.
5. Types of Credit Counseling
When it comes to credit counseling, there are nonprofit organizations as well as those who work for a profit. Considering that those seeking credit counseling are having financial troubles, it may make more sense to seek out a nonprofit organization because they will have lower fees. Non-profit, Christian, bankruptcy, and consumer credit counseling are the main types of counseling out there. It is important that you do your research to find the right type of company for your situation. For example, Christian counseling is not strictly for Christians, but it does involve a certain spiritual aspect.
6. Impact on Your Credit Score
Credit counseling is intended to help you improve your financial position by paying off or managing your debt. It is important to know that participating in credit counseling doesn’t always have an effect on your credit score. Depending on your situation, however, it can have a negative or positive effect on your score. Simply participating in credit counseling will not appear on your credit report. However, using your company to repay your debts may. Settling a debt for less than the original amount is most likely going to have a negative effect on your score.
Guest post from Mickey Scott. Mickey writes for CreditReport.org.