Credit Counseling, Debt Negotiation & Credit Repair Companies
If you’re thinking about using Credit Counseling, Debt negotiators or Credit Repair Companies to help you with a challenging financial situation, make sure you do some research before selecting a service.
While there are definitely credit counselors and others with excellent debt management skills, ethics and intentions, there are also scams out there and people who may try to take advantage of your financial situation for their own financial gain.
- Some credit counseling, debt negotiation and credit repair companies have you send them a check every month, out of which they’re supposed to pay your creditors on your behalf. However, if they pay your bills late, or not at all, you could be in even more trouble than before you started.
- Credit repair companies typically promise to help you clear up your credit problems. They are supposed to contact credit bureaus and help clear up any false information that is found in your credit report. If they do a good job, your credit rating will be improved. But it is possible that it only ‘looks that way” temporarily if what they did was to remove various listed factual information. Because the whole process can take a while, the credit repair company may send you a clean credit report, giving you the false impression that your credit rating has been improved. But after you’ve paid them off, you could discover that all the negative items eventually reappear on your report.
- Some companies and individuals may charge a relatively large initial “administration fee” to set up your account, plus an ongoing monthly service charge. The fees vary depending on the company and the amount of your debts. Make sure this seems reasonable and that it makes sense to you for your particular financial situation.
Before signing up for any service, make sure that you check them out thoroughly beforehand.
Also, don’t let the words “non-profit” cause you to let down your guard. Seek references and check with agencies like the better business bureau before you sign the contract.
It’s worth noting that you can negotiate with your creditors yourself (debt negotiation), and, of course, you could save a lot of money in fees to a debt/credit settlement company or credit counsel service if you do so. Most creditors will agree to take a smaller monthly payment from you and stop or reduce all interest and fees from accruing. But if you choose this route, you must be properly prepared and feel strong enough emotionally to see it through.
But, many people just hate dealing with this sort of thing, and are also feeling completely overwhelmed by their overall debt and payments required, so a reputable credit restoration company or individual counselor could be a big help.
A good consumer credit counseling service can do an excellent job at helping you to reverse and repair a bad financial situation. They can help you to prepare and stick to a budget, remove items that are incorrect in your credit bureau report (such as: general errors, items after a bankruptcy that should have been removed, duplicate items, children’s items on parents’ reports, and paid-off items that still show as past due), and help you to stick to the discipline required to form a better financial picture going forward. Just do your due diligence before you commit to anything.
