What Is Credit Counseling and How It Can Save You From Debt

 

Struggling with debt can be debilitating. Whether it’s from student loans or credit cards, you may need some guidance to help you get your head above water. It’s easy to feel like you’re suffering alone with your debt, however, there are many people that are in a similar situation. It’s easy to fall into debt and find it impossible to climb out and to make the situation even harder to deal with, especially when there are predators looking for those struggling with debt to swindle. 

Despite the obstacles in front of you, there is help available to manage your debt. By working with a reputable consumer credit counseling firm, you can begin taking back control over your finances.  

What is credit counseling?

Dealing with credit card bills and other forms of debt can be emotionally taxing and if you need some extra support to organize your financial situation, then credit counseling may be the best choice that can help. Once you’ve learned what is credit counseling then you can begin the process of securing your financial future.

Managing and freeing yourself from credit card debt is not as difficult as you imagine. With the aid of debt relief experts, you can pay off your balance at a fraction of what you originally owe. When sitting down with a credit counselor, you’ll review your household budget, your credit report, and any outstanding debt that you have in order to get a clear picture of which path would be best get you back on your feet. You’ll gain the knowledge and the tools necessary to get control back over your finances and stay on budget in the future. 

By requesting credit counseling help, you can be certain that any situation can be managed. Whether you need assistance with housing or mortgage loans, student loan debt, or credit card debt, you’re not the first to request aid and you’re not the first to get out with a strategic plan in place. 

What is a credit counselor and what is credit counseling service

Credit counselors will provide a number of services that can help you organize your finances and lead you on a path out of debt. The journey typically starts with a free session to understand your specific case and outline a general budget. It will be an overview of your financial background and the goals you hope to achieve. If you’re a proper candidate, then additional credit counseling may be recommended.

If you qualify for further counseling, then you’ll be given a debt management plan. A debt relief expert will assemble a plan in an attempt to consolidate the consumer debt you’ve accrued and negotiate a lower interest rate on your behalf. The plan will most likely be executed on a monthly basis over the course of a few years, eventually freeing you from the debt. 

If you’re suffering under the terms of a student loan, then your debt relief counselor will have conversations with the issuers of the loan and come up with options to restructure the repayments. Housing debt can be similarly evaluated, and you can receive additional tools and resources to help understand the cost of rent or mortgages.

There are circumstances where you may need to file for bankruptcy. If this is the case, then your counselor will create a plan and, educate you on the process of filing for bankruptcy and what to expect after you’ve filed. 

What a credit counselor needs to know about you 

Time is of the essence when dealing with debt. Being prepared for your free credit consultation can help you begin the process of getting out of debt.

In the initial interview with your debt relief expert, they’ll gather as much information about your personal finances as they can in order to make sure that you qualify for their services and so they can build an appropriate debt management plan. Be prepared to answer questions regarding income, assets, budgets, and general household expenses. If you can, have statements ready to speed up the process.

Outside of the standard questions asked about your current finances, your debt relief expert will also explore the conditions that initially sent you into debt, this way they can help formulate a plan to keep you out of debt while you pay off your current balances. They will also ask about any additional cash flow, savings, and assets that could help to mitigate some of the outstanding balances due.

By organizing this information beforehand, you can make sure that you have the answers ready when your counselor begins asking questions.

Here’s a quick checklist to have on hand:

  • Income: Gather the last statement for any source of income you bring home.
  • Debt: Make a list of all monthly payments you make towards your debt, the interest rates that you’re charged and the terms of any loans that you’ve taken on.
  • Credit cards: Compile the last statement of any credit card that you hold with the total amount due, current balances, and interest rates.
  • Monthly household expenses: Sort out the average expenses that you have each month. This will include food, utilities, internet, cell services, insurance, and any other monthly expense.

Benefits of credit counseling

By seeking the help of a credit counselor you are not only finding a way to pay off your debt as a short-term goal, but you’re also taking back control of your finances in the long-term as well. 

The main benefit you’ll receive from getting help from a credit counselor is that they’ll make you a debt management plan and negotiate better terms with your creditors. You’ll be given a more manageable rate for monthly payments. You may even have some of the late fees waived. Your credit counselor will also put an end to the persistent calls issued by debt collectors by stopping any direct contact.

After securing a debt management plan, you’re also securing a means to a better credit score. By achieving and maintaining a good credit score, you can begin taking out loans with extremely favorable interest rates. With the education that you’ll receive from credit counselors, you can begin rebuilding your credit and retain it. 

If you’ve recently applied for new credit and have been rejected, a credit counselor can help you with the negotiation to get your application approved.

One of the ways that credit counseling services can help organize your finances is through bill consolidation. You can transfer all of your smaller debts with variable interest rates into one monthly bill.

The best service provided by a credit counsel agency is through the education you’ll receive to maintain a healthy budget to achieve the life that you want with the means that you have. 

Is there a downside?

As with any service whose goal is to help people, there are always those seeking to exploit those in need. The best way to avoid falling into the trap of scammers is to ensure that you’re working with a certified agency that complies with American Fair Credit Council (AFCC) and has agreed to follow industry “best practices.”

Many people still believe that it is considered a black mark on your credit report to apply for credit counseling services such as a debt management plan and it will negatively impact your FICO score. While this may have been true at one point, since 1998, it no longer is a factor when calculating credit scores after a study showed that those entering the program posed no greater risk than the average person.

When you may need a credit counselor 

You may be unsure as to when you should first contact a credit counselor. Should you wait until you’ve missed your first payment, or should you wait until you start receiving ominous threatening phone calls from debt collectors? The truth is, you shouldn’t wait until you feel it’s too late. Credit counseling is a great option for anyone looking to increase their financial knowledge and would like help to develop long-term financial goals.

Even if you’re applying for your first loan or have just received your first credit card, having assistance from a credit counselor can help to create and stay on a smart budget.  By having an expert in your corner, you can make sure that you don’t take on more debt than you can handle.

The best takeaway is to be proactive with managing your credit card debt and to contact a credit counselor before you receive the ring on the doorbell from a debt collector.

CreditAssociates and credit counseling

If you are drowning in credit card debt, we know you’re looking for a way to get on top of your debt while maintaining the happiness of your lifestyle today—you need a solution that will fit your circumstances.

Determining which debt relief option is right for you often demands some savvy research skills, not to mention a lot of time. This is where CreditAssociates can help. By contacting one of our Debt Consultants, you’re working towards a debt-free future and letting us do the heavy lifting. We’re experts when it comes to reducing debt: we’ll even negotiate with creditors to make that high-interest credit card debt more manageable to work with month to month. You can rest easy knowing professionals with your best interests at heart are taking your situation into account.

CreditAssociates takes pride in turning people’s lives around and providing them the path to a better financial future. Whether you’re just starting to tackle your debt now or have been struggling with credit card debt for years, we want to hear from you. Contact CreditAssociates today for your free consultation.