How a Credit Counseling Center Can Help You

[Apr 16, 2008.]

 

The old thinking in credit rebuilding was that you should avoid credit counseling at all costs – and some people will still tell you that. It used to be that going to these kinds of companies would cause your credit rating to drop as you were admitting financial troubles. However, times have changed and these companies are now being seen as a way to guide people out of their debt and help those that want additional assistance. Here's what you can expect when you go to a credit counseling center in your local area.

You will first be asked to bring any receipts, statements, and information associated with the debts that you have. This will help you prioritize certain debts as well as see what kind of total debt you have accumulated. With these numbers, your counselor will be able to talk to the various credit card companies and loan agencies in order to help you with the repayment plans that you will work on together. In this process, the customer service representative counselor will be negotiating with these companies about lowered interest rates that will help you have more manageable payments.

With these numbers and some talk with the debtor companies, you will then talk to the counselor about your income and what you can afford to pay at this time. Generally, you will construct a budget that you can handle with your current income and be given a payment that you will need to pay over a certain time period, contributing to your debts, but affording you the convenience of only one payment. Be sure to be honest at this stage because you don’t want to get behind in your payments as well because this can cause you to need to take more drastic steps in terms of your financial future.

Try to go to several credit counseling centers before you decide on just one, as you really want to find a counselor that you feel comfortable with and a company that you trust to provide you with superior credit advice.

The counseling center will be able to offer you advice and tips on spending and financial planning as well. This will help you learn healthy spending habits as well as begin to plan for your future. You can work out ways to save any additional income through the budget you’ve created as you clear out the debt and get on the road to success.

More Information:

• Increasing Your Credit Score and Rebuilding Your Credit
  If you know that your credit score is low, you know that some financial transactions are going to be more difficult. You might find that you are turned down for some loans or that you're getting higher than average interest rates for the loans you are approved for.


• Negotiating with Creditors
  If you're like most people, you probably feel helpless against your debt. You feel like there's nothing that you can do but pay and pay and pay until it's finally gone.


• What's Your Strategy?
  When you're starting to take charge of your credit card debt, the advice that you read can be just as confusing as those papers that come with your credit card bills.

External Links:

• Choosing a credit counsellor


• Information About Credit Counseling and Debtor Education - Produced in cooperation with the Department of Justice's U.S. Trustee Program