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Credit Counseling Facts
These days it seems that credit counselors are appearing everywhere, insisting on helping you out of debt. Credit counseling may seem a good idea if you are in a bad situation. But some credit counseling services can do more harm than good. There are some things you should know like whether you need credit counseling in the first place and how to spot a fraudulent credit counseling service.
Basically credit-counseling services were created to get in touch with your creditors and negotiate lower interest rates and payment plans for you. Some credit counseling companies do a great job renegotiating your debt and are well worth the price you pay. Others will charge you huge fees but leave you wondering when they’ll actually get around to the credit counseling process. The worst-case scenario is that they aren’t a real credit counseling companies at all, they just take your money and by the time you figure it out they’ve disappeared.
The number of people signing up for credit counseling is constantly on the rise. Only about half can be expected to successfully complete their repayment plan, the other half dropping out for various reasons. If you can pay all your bills and keep current on your accounts, you certainly don’t need credit counseling, if your rates are high you can renegotiated that just by asking. But there are a few factors that indicate you are in need of credit counseling. If you cannot pay your minimum payments or are consistently late on one or more bill then you should look into credit counseling. Similarly if you are being hounded by collection agencies or you have been unable to work out a reasonable repayment plan on your own then credit counseling is likely your best bet. Be aware however that if you are too far in debt then even credit counseling may not be able to help, if things are that bad you may not have many choices besides bankruptcy.
Once you’ve decided that credit counseling is the way to go, you should identify some things that indicate the credit counseling company you are considering may not be the most reputable. The best credit counseling services charge around a $10 set-up fee, bad companies are usually charge much more. Unless they are also providing extensive money coaching or other services then beware of large upfront costs. Make sure the credit counseling services are accredited. All legitimate companies are accredited by with either the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies. If a company wants to miss making payments to your creditors and keep that money as a fee, they are not a reputable credit counseling service. Missing payments can hurt your credit rating. If a credit counseling company says they can fix your debt with little money and no impact on your credit, look elsewhere. Companies that can actually help you would never make such unrealistic promises.
Subscribe to the comments for this postWill Debt Consolidation Loans Be Right For You
Debt consolidation loans for bad credit will work to your advantage only if you are able to find the lowest interest rate possible. Before you jump to the drastic decision of filing for bankruptcy to cure your financial ills, you might want to consider consolidation as a viable alternative. Remember that a bankruptcy can stay on your credit record for seven years (or in some instances longer!).
First you need to be clear about what it means to consolidate a loan. This is a kind of loan that is secured by way of some type of property you own. A new type of loan comes into creation that is able to pay all or most of the debt you presently have owing. This in turn then saves you money and makes it easier for you to live on the money you are bringing in. It also helps to ensure that your bad credit does not get any worse.
If you are seriously thinking about consolidating then you need to add up the money you currently owe. Consider the loans you have as well as your present balances on your credit cards. This will make things so much easier when you start the application process. This will also make paying the one debt payment a month easy to manage and also easy to keep a concise record of.
Once you have recorded all of your debts you then need to find out what the interest rates are for each one. Not all credit cards have the same interest rates. For example, department store cards tend to have higher rates than do credit cards issued by banks. In general, most credit cards have interest rates that range from 12 to 21 percent. In the same way, you need to know the interest rates that are attached to your loans.
Once you are armed with all of this information, it then becomes necessary to compile a list of lenders and go talk to each one. Find out what they have to offer in terms of debt consolidation loans for bad credit. Check the Internet for names of lenders. You can also check the yellow pages of your phone book.
You might want to start your search at your own financial institution, be it a bank or credit union. You might find that your bank is more than willing to help you to consolidate your debts. Be aware however that having bad credit will probably make getting this type of loan somewhat trickier than if your credit was fair to excellent. It is also important to note than many banks charge application fees to apply for these types of loans that are high- anywhere from $50 to $200.
If you need more debt help then you are able to find then visit Care One on the web for the help you need. This is a consumer credit counseling company
