Consumer Credit Counseling Services

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Buried in Debt

Consumer Credit Counseling Services help many Americans who are buried in credit card and unsecured debt. The rising costs of living, unemployment and increasing interest rates have caused many people to easily accumulate thousands of dollars in credit card debt. Many people budget credit card payments as part of their regular monthly expenses. People become so buried in debt that they cannot even make the minimum payments on their credit cards each month, and the increasing credit card payments become so high that they cause financial, emotional and physical problems. Consumer Credit Counseling Services act as agents between credit card companies and struggling debtors by negotiating credit card payment plans that borrowers can afford. While most credit card companies will not negotiate with consumers to lower interest rates and payments, many will make agreements for borrowers with Consumer Credit Counseling Services.

How Consumer Credit Counseling Services Work

Consumer Credit Counseling Services will ask for identification, review your finances and help you set up a monthly budget, which typically includes smaller payments to each of your creditors. The Consumer Credit Counseling Service will contact each debtor to agree with the specific terms of the repayment plan. Typically you will make a payment to the Consumer Credit Counseling Service each month plus a small fee, and the company will in turn make payments to your creditors. You will also have to sign a contract with the counseling agency.

Finding a Credible Consumer Credit Counseling Service

It is important to be diligent when deciding on a credible Consumer Credit Counseling Service. Look for a Consumer Credit Counseling Service that is a non-profit company. Check the company with the Better Business Bureau. If there are any negative marks, find another company. Make sure the company is accredited by either the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA). Be wary of large upfront fees and promises to eliminate your debt. There are many companies that scam people out of money with unrealistic promises about eliminating consumer debt. They may also suggest your credit score will not be affected. Some companies will take your money and not pay your creditors. Legitimate companies will charge a small set-up fee and then ongoing monthly fees depending on the amount of your payments. Consumer Credit Counseling Service fees vary; however, they are usually a small percentage of your total monthly payment.

After you have made an agreement with a Consumer Credit Counseling Service, follow up with your creditors in a few weeks to make sure they have been contacted and made an agreement with the company.

Will My Credit Score be Affected?

Using a Consumer Credit Counseling Service will reflect badly on your credit report even if you make all of your payments on time. Look at your overall financial situation before using a Consumer Credit Counseling Service. If you cannot make your minimum credit card payments each month and your creditors will not negotiate with you to reduce your interest rates and payments, you may want to consider using a Consumer Credit Counseling Service. A Consumer Credit Counseling Service will also help you avoid bankruptcy, which would likely reduce your credit score more than using a counseling service; a bankruptcy is also usually reflected on your credit score for seven to ten years. Most people's credit scores will increase significantly two years after making the last payments with Consumer Credit Counseling Services.

The most important thing for getting your life and budget back on track is not to wait too long to get help.