Credit Counseling

If you're thinking about getting some outside help by way of credit counselors and don't know anything about them, the following tips may help you understand what consumer credit counseling services are all about and what to beware. Basically, counselors can help you get control of your money flow - incoming and outgoing.

1. Credit counseling services can be for-profit or nonprofit. Both types charges fees, however there are some nonprofits that offer free counseling, see tip #3.

2. Credit counselors may or may not be certified. If possible use a certified counselor. You may be more limited in your choice of the type of counselor if you choose a nonprofit but they may have enough necessary experience to help you with your debt management or any debt consolidation.

3. Although nonprofit consumer credit counseling services are nonprofit they are not always free. And some may not be affordable. Some may want you to make donations that will add to your overall debt problems.

4. For-profit credit counseling services may charge high or excessive fees. Some of these fees may not be obvious so read any contracts carefully.

5. Credit counselors can help with a wide range of budget and credit problems. The can help you plan a budget, help educate you and provide helpful credit resources. They can help with car or home loan or mortgage applications. They can help with credit card consolidation or consolidation of other bad debts or debt consolidation.

6. Nonprofit consumer credit counseling services are found at colleges and universities, at your local credit unions, on military bases or installations or through your local community resources hotline.

7. If you're unable to find a nonprofit counseling service then talk to your local bank or lending institution and ask for a recommendation. Or get some names from your local Chamber of Commerce. In any case, check with your local or state Better Business Bureau to see if they have any unresolved complaints against the service on file. If you have a local consumer protection agency, check with them also.

If at all possible try to repair your credit yourself if your credit needs fixing. There are easy, inexpensive ways to do it. If the situation has run amok than seek out nonprofit counseling services first. If you have to hire a for-profit agency, make sure you read the fine print on any contracts and have someone else look over the contract too if possible. Making an effort to resolve your credit problems, whether through a consumer credit counseling service or not, will pay off in the end and protect your future credit report and score.

In present society, many people find that they need credit for any number of big purchases, from their automobile to their home and they may be called upon to produce a good credit rating without learning more about bad credit counseling repair.

However, in many situations, from sickness in the family to divorce, may cause a person to have a less than perfect credit score. They may have collection agencies calling them for money they just do not have, and may feel that the pressure resulting from numerous debts are too much for them to handle. At this point in their search for a way out, they may want to investigate using a bad credit counseling repair company.

These companies are specially trained to handle all types of credit problems, and will teach you useful skills such as budgeting and saving techniques as well as being a go-between with your creditors.

They will also help you make agreements with creditors to pay off your debts in a timely manner, so that your credit worthiness does not suffer any further problems in the future. With good, bad credit-counseling repair, you could be on the road to clear credit and increased credit worthiness in no time.

Bad Credit Counseling Repair does not offer miracle cures for your indebtedness, nor does it claim to make you debt free overnight. However, it does help you to deal with your situation properly.

With bad credit counseling repair, you are taught how to care for yourself, how to budget, how to clear up your credit and how to prepare for your credit future. Using one of these programs doesn't just buy you a fish, it teaches you how to catch your own.

With bad credit counseling repair, you may have an opportunity to investigate why you have these credit problems, get advice on how to fix them, as well as someone to help you along the way. If the problem is too big, you may be enticed into seeking the services of a credit repair company, who will claim that they will help you get out of debt overnight, only to scam you out of hundreds of dollars that could have gone to one of your past-due bills.

Before considering this avenue, you will want to try the services of a bad-credit counseling repair company that will help you get your life back on track and eventually get you out of debt.

Many bad credit counseling repair companies offer many great services that help you with your credit problems, such as budgeting classes and debt consolidation services. There are even some that help with financial planning.

If you are looking for a way to get yourself and your family out of debt, you will want to get a great credit counselor who will show you the what to do for yourself in order to create a strong and stable financial future.

You can find these programs in many different places. You may hear about a good program from friends and family, you may receive a recommendation from creditors who are anxious to help you to fix your credit so they can get their funds.

You may also find them in your local directories and yellow pages; there may be dozens of such programs to choose from. You may also find many effective bad credit counseling repair companies online that will help you work your way out of debt. You will find that online, you can even compare these programs to see which will benefit you the most. So find your way out of debt and trust your future to a credit counselor who will teach you how to get out of debt and stay out

A Secret Credit Counselors Were Able To Hide For A Long Time

Credit counseling was created by the credit card industry back in the fifties, who lobbied in congress to achieve "non-profit" status.

Many have made quite a profit from credit counseling over the years. The banking and credit institutions, credit reporting agencies and those politically sensitive to these corporate lobbying giants all promote credit counseling because next to minimum payments, this is how creditors make the most money!

In 2004 PBS FRONTLINE and The New York Times produced "The Secret History of the Credit Card" and went on to win 2004-05 Grammy for Outstanding Investigative Journalism. (pbs.org/wgbh/pages/frontline/shows/credit/)

Now the truth is out, but your creditors are still hoping you don't find out...

Over half of the Credit Counseling industry lost their non-profit status in the past 2 years.

Here's the PROOF "they" don't want you to see:

* Washington Post: IRS Revoking Exemptions Of Credit Counselors (jaamazing.com/debtgotoguy/truth-about-credit-counseling/Washington-Post-IRS_Revoking_Exemptions_Of_Credit_Counselors.pdf)

Who's best interests do you think they have at heart?

Many people make the mistake of trusting a credit counselor.

The Truth About How Credit Counseling Affects Your Credit

While credit counseling no longer affects your numerical credit "score"*, being enrolled in "CCCS" has a VERY DAMAGING impact on your credit "worthiness".

* This is assuming that the credit counseling agency actually makes your payments on time - which is often NOT the case, as many, many people who have made the mistake of enrolling in credit counseling report.

Why does credit counseling hurt your credit worthiness so badly?

Because statistics say that it's most likely that you will not complete your program but will file bankruptcy instead. Some statistics report that fully 7 out of 10 people who enroll into Credit Counseling fail to get out of debt. Just ask ANY mortgage lender in the country...

They will tell you the truth:

When pulling your credit report, EVERY ACCOUNT included in credit counseling is listed just as a bankruptcy would be, with a notice under each account saying something similar to:

"THIS ACCOUNT IS INCLUDED IN CONSUMER CREDIT COUNSELING SERVICES"

This means big trouble for you and your credit.

Lenders call this a "walking bankruptcy" because it's a *major red flag* indicating you cannot manage your money and had to hire a third party to do it for you. Plus, you still owe the debt and are at much greater risk of filing bankruptcy.

How will these negative credit entries affect you?

You pay much more in fees and interest, if you are even able to obtain credit at all, during the full 5-7 years you are enrolled in credit counseling.

Who's Hiding This Hurtful Half Of The Truth?

Credit counselors, your creditors & the credit reporting agencies are all in cahoots together, and they all promote this "half-truth" that CCCS does not affect your credit score. While this is true that credit counseling has no affect in your credit score, that's only half of the truth.

Now you know why...

Because credit counseling has a Major Negative Impact on your Credit Worthiness. Share these facts before someone else becomes another stat! Learn the difference between "credit rating" and credit worthiness", and learn "how credit works" so it works for you.

The Truth About Credit Counselings So-Called "Non-Profit" Status

Don't be fooled by the "non-profit" credit counselors.

The IRS has revoked the non-profit status of over 50% of credit counseling industry in the past two years.

You see the proof in the news reports above.

But WHY?

Because they're making LOTS of profit!

Their CEO's are paid VERY WELL from the kick backs they receive (called "fair share") -- from YOURS creditors, who pay them (the same creditors who created credit counseling in the first place!)

Plus, aren't you paying a $35-85 a month FEE?

How's that a non-profit?

On top of these costs to you, many credit counselors ask you for a "donation". Often, these agencies pressure their customers into making "regular donations".

Watch Out For CCCS!!!

Now the IRS is conducting an investigation of the entire industry!

Is There A Better Alternative Than Credit Counseling?

Now don't me wrong, credit counseling can be a great thing for certain people.

Could credit counseling be the best option for you?

Sometimes, if a person cannot qualify for any other better programs to eliminate debt faster, at a lower cost and a lower payment with less credit damage, then maybe credit counseling may be best.

Maybe not.

I've helped many people get out of debt through credit counseling over the years, but only after they were educated on the all of their options, and the whole truth about each. I personally consider it unethical to promote a single solution instead of looking at an individuals specific circumstances and situation to discover the exact solution that's best for them.

Are you 100% certain that Credit Counseling is best for you?

If you want to get out of debt ASAP, then you should know that other options are available.

Those that are considering personal bankruptcy can often side step that by using a debt consolidation credit counseling program instead. The process is simple to get started. The goal is very clear. Combine your debts into one monthly payment that is more affordable for you to pay and often will help you to pay less on the loans that you have. You'll pay less monthly and possibly pay less overall because of lowered interest rates. That makes it well worth the investment. From student loans to credit card debt, debt consolidation can often help you to overcome your situation completely.

Getting credit card debt consolidation help can give you instant relief from creditors harassing you. For example, if you obtain a debt consolidation loan to get a handle on your bills, you can eliminate all of the credit card debt that you have. Often you'll also receive a lower interest rate. You'll also only have to pay one bill per month. Once you've obtained the loan then you'll be able to pay off all of you debt that's outstanding. This will stop the stressful phone calls.

For those that are working their way towards personal bankruptcy, a debt consolidation credit counseling program is another option. Here, you can work on paying down your debt through a program that does not actually combine your loans, but will work with your lenders to get a lower monthly payment for you and often times helps you to lower your interest rate. You make one payment per month to the counseling company that then pays your lenders. This is called Chapter 13 bankruptcy. Each of the options listed here are ones that are effective and been used by millions of other people.

Facing a mountain of debt? Hiding from collection agencies? Dreading the phone ringing? There isn't a way to magically make all your debt go away but there can be relief. Consider credit counseling. Because of the state of the current economy, more and more people are choosing to utilize this service. You are certainly not alone in your decision.

A credit counseling service will work with you in determining a realistic but strict budget based on your income and assets. They may recommend selling a newer model car and buying an older one and putting the difference in cash towards your debt. Or perhaps encouraging you or another family member to get a second job to help pay bills. The service will also work with your creditors in reducing interest rates, getting rid of late payments and over the credit fees.

Most importantly the service will negotiate with each of your creditors to come up with a new monthly payment that you can manage. That payment will be split proportionately among your creditors, usually based on the amount owed to the specific creditor as a percentage of the total debt owed to all creditors.

While you could do everything the credit counseling service does yourself, your creditors will take the service more seriously, especially if they've worked with the service before.

The following tips will help you make an informed decision when choosing the credit counseling agency that is right for you. The objective is to find a service which puts your best interests first, is experienced, established, and ethical.

One of the most important things you should look for is an agency that is insured and bonded. This will protect you in the event that the agency closes down. You pay the agency and the agency then splits the payment among your creditors. You don't want the agency keeping the payment because they're in financial trouble or are unethical.

The agency you choose should have their system set up to pay your creditors on a monthly basis. It will do no good to work with someone who pays on a less frequent basis. This will damage your credit even more. Occasionally payments are made on a twice a month basis. Keep in mind that the agency, while making the payments to your creditors, depends on you to pay them. If you don't, the agency won't pay your creditors. With some agencies it is possible to set up an automatic withdrawal from your checking account or have it electronically sent from your paycheck.

You need to discuss fees and get everything in writing before signing any kind of contract. Many credit counseling agencies charge a monthly fee, in exchange for their services. You want to make sure that they won't keep your entire first months payment to cover these fees. This will only put you further behind. You may have to make two payments in advance or pay the agency an upfront fee and the first payment. It is best to look for a credit counseling agency that is government-approved. Chances are they will charge a much lower fee.

A credit counseling service or agency can be a lifesaver if you're drowning in debt.

You're in debt and need help. You are watching TV late at night and low and behold, there is an ad from a company offering to help. They are a non-profit organization with a mission. Sounds wholesome enough. But wait, there is a lot you should know before you make the call and sign up for their services.

These organizations claim they will negotiate lower payments and lower interest rates with your credit card companies. You will have to make one simple payment and they will do the rest.

But this is not the whole story.

First, what these companies do can hardly be called negotiating. As a matter of fact, I would argue that they work for the creditors, not for you- the consumer. Here is why. They receive a great deal of their funding from the same credit card companies they will supposedly be negotiating with. Also, credit card company executives sit on many of their executive boards. But the biggest argument against their claim to negotiate is that the creditors dictate the terms they will give you. Every consumer gets the same deal from each company. There are no negotiations.

Second, they will only accept you into their program if you are able to demonstrate an ability to meet the new payment arrangements. This is for the creditor's sake, not yours, because they are unable to play favorites among your creditors. In other words, they will not process a partial payment because that would force them to pick and choose which one to pay.

Third, they will often not suggest another strategy for dealing with your debt, as a true advocate would do, though it may be a better solution for your particular circumstances. As an agent of the creditors, they are not allowed to suggest bankruptcy as an alternative solution.

Fourth, non-profit does not mean no fee. These companies often charge an upfront fee in addition to a monthly service fee.

Fifth, don't expect much in the way of counseling or hand holding. They are essentially a payment mill and that is how they make money. In addition to the money they charge consumers, they also earn a percentage of every dollar they send to creditors (known as fair share contribution).

Also, what they often fail to mention is that your credit will be destroyed despite making monthly payments to your creditors under a new payment arrangement. Anyone pulling your credit report will know that you are participating in a consumer credit counseling program.

Then, what are you supposed to do if you are in financial despair and facing mounting debt? Surprisingly, the answer may be to take on the challenge yourself. There is little they do that you can't do by simply communicating with your creditors. And with a little knowledge, you can diagnose your situation and determine if another strategy, such as debt settlement or even bankruptcy (as a last resort), may be a better fit. There are a number of books and self-help tools on the subject. If you prefer the best of both worlds, a coaching program may be the answer. It will likely cost significantly less than hiring a company and often improve your results.

So, when you hear the ad on the radio or TV, take a deep breath and resist the temptation to call, at least right away. First do a little research. Perhaps read a book or a report and decide the best course of action yourself. If you decide to use a consumer credit counseling company, at least you will do it with your eyes wide open.