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What is a Credit Counselor?

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  • Written By: Garry Crystal
  • Edited By: Niki Foster
  • Last Modified Date: 08 November 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Credit counseling is the term used to describe working with a credit counselor in order to pay off your debts in small, monthly amounts. If you are in debt, or find that repayments to your lenders are spiraling out of control, then seeking the advice of a credit counselor may be your best option. People who continually receive phone calls or bills from creditors are likely to need the services of a credit counselor.

The first thing to do is to find a reputable credit counseling service. There are many scam services in operation, and it is best to avoid television and newspaper ads that offer a quick fix. Look for a reliable company that has been accredited by the Consumer Credit Counseling Service. The next step is to meet with a credit counselor and supply them with all your financial information.

The credit counseling service will begin to contact all of your lenders and inform them of your intention to create a repayment plan. Your counselor will work with your lenders to create a plan that should lower your interest rates and repayments. The payments should be much lower than the original payments, and they should be a lot easier to live with.

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Some credit counseling services offer a debt management system. This is an option that enables you to pay one lump sump to the credit counselor, who will make your payments for you. If you choose this option, make sure you check your monthly statements. There have been cases of missed payments by credit counseling services. This can happen through error, and if it does, your credit report will suffer as a consequence so be sure to stay on top of it.

There may be fees when applying to a credit counseling service. A reputable company will only charge you a very small fee, around 15 US Dollars (USD) per month. If a company asks for a lot of money up-front before they will help you, it is almost certain to be a scam.

Applying to a credit counseling service may initially harm your credit report, but if you are at the financial stage at which you need to seek help, then it will certainly be to your benefit in the long run. If you maintain regular payments, you will find that your credit record is slowly repaired. After several months of regular repayments, you may even find that you can apply for new credit accounts.

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