What you should know about credit counseling
Buyers beware! Not all credit counseling agencies are in business to help you get out of debt. Understanding credit, credit card companies and how to talk to them will help more in the long run than these businesses. When looking at credit counseling agencies review first, ask questions and listen. You want to make sure as with any business transaction that the company you are choosing to do business with has customer confidence, positive business ratings and a reputation for helping financially distressed clients back on the right track.
Believe me, been there done that. The first agency my husband and I went to asked to put all our bills including the car payment with them. They had us bring in our statements, the billing addresses and contact information. After reviewing what we owed they gave us a lump sum to pay each month which in return they would ask for reductions on the credit card interest rates, reduction in payments and they would organize and pay all our bills. The intent was so we would have no more late payments, our credit rating would increase and we would pay off our balances quicker. The reality was this company didn’t do as we were told and being strapped for cash we were in no position to argue. What they did was not pay our bills on time, which continued the phone calls from collectors and ruined our credit even further.
One thing you must know when entering a business partnership with a credit counseling agency is that even though the intent is to do the right thing and pay your bills off it doesn’t show that way on your credit report. Doing the right thing didn’t get my husband and I very far. Once we had entered credit counseling our car broke down which wasn’t good timing at all. We went to the dealership to see what we could do in order to finance a used car. The salesman came back and stated that since we were in credit counseling he had to give us a much higher interest rate. I didn’t understand, why if you were paying your bills back that you would look unfavorable to the lenders. He chuckled and replied with if you would have filed bankruptcy yesterday I could get the interest payment almost to nothing. Sad but true so keep this in mind before you enter into a credit counseling relationship.
Most communication that a credit counseling agency handles can be done by the individual if time is taken to achieve it. Calling credit cards companies, asking for reduction in interest rates, and working out solutions can all be achieved by you personally. Understand that this doesn’t happen overnight, it may take multiple phone calls to contact the right representative or written communication stating what you can and cannot afford before getting a reduction in your rate. It’s your situation and the best person to plead your case is you. If you are unable to commit to this process then you may need professional help.
After our initial attempt failed we did finally reach a credit card counseling service that worked. This credit card company only dealt with credit card bills and personal loans. It did not include your car payments into it. Also it provided information after we were put into the program regarding how to stay out of debt, how to plan and how to save. Their program took to the lowest balance, paid that one off first then accumulated that payment amount on to the next highest. Within a few years we were out of debt in regards to the credit cards. It wasn’t an easy path but it did work.
Before attempting to find a credit card counseling service I recommend that you call the companies personally, explain your situation and see if you can resolve the problem with a solution that works both for you and the credit card company. If that doesn’t work research the firms before buying into what they are selling. Look for reviews online and buy only after your feel comfortable with the agreement.