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Credit Counseling Help
Question: Is it a good idea to get help from credit counseling? I heard it looks bad on your credit report if you are enrolled in these programs. Is it better to try and make the payments on your own?
Answer: Thanks for your question, and credit rating impact is an important consideration in comparing credit counseling. I thought you might want to evaluate all of your options, including creditcounseling alternatives and so I will try to evaluate several options for you.
If you want a free credit consultation with one of Bill's approved credit counseling partners, click here: http://www.bills.com/debthelp/debt/
Credit Counseling and Debt Help comes in many forms, so it is important that you think about what your needs and concerns are before signing up for any credit counseling program. The four primary concerns for most consumers are: i) monthly payment, ii) time to debt freedom, iii) total cost, and iv) the credit rating impact of the credit counseling program. Be sure to evaluate each program, relative to your prioritization of these factors.
Options include: credit counseling, debt negotiation/debt settlement, a debt consolidation loan, and other debt resolution options. But, it is important to fully understand each option and then pick the solution that is right for you.
Credit Counseling
Credit counseling, or signing up for a debt management plan, is a very common form of online debt consolidation. There are many companies offering online credit counseling, which is essentially a way to make one payment directly to the credit counseling agency, which then distributes that payment to your creditors. Most times, a credit counseling agency will be able to lower your monthly payments by getting interest rate concessions from your lenders or creditors. It is important to understand that in a credit counseling program, you are still repaying 100% of your debts ? but with lower monthly payments. On average, most online credit counseling programs take around five years. While most credit counseling programs do not impact your FICO score (the most prominent form of
credit scoring), being enrolled in a credit counseling debt management plan DOES show up on your credit report and, unfortunately, many lenders look at enrollment in credit counseling akin to filing for Chapter 13 Bankruptcy ? or using a third party to re-organize your debts - so it really negatively impacts your credit profile and ability to get loans while you are enrolled in the credit counseling program.
Debt Settlement
Debt settlement, also called debt negotiation, is a form of online debt consolidation that cuts your total debt, sometimes over 50%, with lower monthly payments. Debt settlement programs typically run around three years. It is important to keep in mind, however, that during the life of your debt settlement program, you are NOT paying your creditors. This means that a debt settlement will negatively impact your credit rating. Your credit rating will not be good, at a minimum, for the term of your debt settlement program. However, debt settlement is usually the fastest and cheapest way to debt freedom, with a low monthly payment, while avoiding Chapter 7 Bankruptcy. The trade-off here is a negative credit rating versus saving money. It is usually best for people with bad credit or a lot of debt (more than $10k so that the savings outweigh the negative credit rating impact).
Debt Consolidation Loan
In a debt consolidation loan, you exchange one loan for another. Many people think first of a debt consolidation loan when seeking online debt consolidation. This option typically means a second home loan (or home equity line of credit) or refinancing your primary mortgage. In case you do not own a home, then your option is limited to an unsecured personal loan. Your ability to find a lender willing to loan you money will
depend of several factors, primarily your credit score, your income, and your assets. You state that you do not own a home, which means that you cannot take out a home equity loan. However, if you have other assets, such as a vehicle, you may be able to borrow money using those assets as collateral. Interest rates on secured loans tend to be significantly less than unsecured notes, which is especially helpful for those with credit problems.
If you have a lot of debt or if you have poor credit, you may not be able to find an unsecured loan to fit your needs. If you do find a loan, you should expect to pay a premium in interest for the credit risk you pose to the lender. Many banks are hesitant to lend to borrowers with poor credit. I also encourage you to visit http://www.bills.com/loans/
Net-net: While there are many forms of debt resolution, many people with good to perfect credit who own homes should look into debt consolidation loans, while consumers with high credit card debt and poor credit may want to explore debt settlement or debt negotiation. However, each consumer is different, so find the online debt consolidation option that fits for you.
If you want more info specifically about credit counseling, you can visit the Bills.com page on credit counseling here: http://www.bills.com/credit-counseling/
Bills.com makes it easy for you to apply to credit counseling programs, by following this link: Credit Counseling Savings Quote
I hope this information helps you Find. Learn. Save.
Best,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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Bill has answered all sorts of questions and has been able to provide those in need of financial guidance with helpful and valuable advice and information on their specific financial area of interest. If you need specific guidance on any of the above mentioned financial areas, feel free to Ask Bill your financial questions and get better informed. Also, make sure to get a free financial health check-up with Bills IQ!
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