The Benefits of Consumer Credit Counseling
One of the benefits of repaying debts through credit counseling is that such plans do not directly impact consumers’ credit scores, unlike debt settlement and bankruptcy, which both can cause one’s credit rating to decline sharply.
| Debt Relief Options |
|---|
| Background |
| CCCS History |
| CCCS Pros |
| CCCS Cons |
| Debt Settlement History |
| Debt Settlement Pros |
| Debt Settlement Cons |
| Cost Comparison |
| Alternative Solutions |
| Conclusion |
Many people, even those who work in the consumer finance industry, still erroneously believe that entering into a debt management plan is detrimental to a consumer’s FICO score. At one time, enrollment in a credit counseling program was considered derogatory mark in a consumer’s credit file. However, in 1998, Fair, Isaac & Co., stopped using enrollment in a credit counseling program as a factor in calculating credit scores when a study it conducted found that consumers enrolled in debt management plans are no more likely to default on new debts than the average consumer.3
Back: CCCS History Next: CCCS Cons
| 3. | Counseling Doesn’t Hurt Credit Score. Kiplinger’s Personal Finance (April 12, 2007).http://www.kiplinger.com/columns/ask/archive/2007/q0412.htm |
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