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All to often credit is fun, easy
to get and even easier to use. Many people find that
even though they have an excellent income, that they
can not keep up with their current debt load and
even if they are managing to make their monthly
payments they are not getting ahead. Is there a
solution to this situation without having to claim
bankruptcy or adversely effecting your credit score?
Credit counseling may very well be the answer for
this type of situation. Credit counseling is
designed to help correct your problem without
impacting your credit score and may actually help
improve your credit score. Credit counseling works
by ensuring that all of your creditors are getting
paid on time, eliminates the trap of revolving
credit and helps you to learn to over come your
credit problems.
Upon entering into a credit-counseling program you
will be asked for financial details and to surrender
most of your credit cards. Almost all programs
acknowledge that you need a credit card or two for
business or travel and will not try to restrict your
ability to work and live in a reasonable fashion.
Once your situation is assessed a plan will be made
so that your will be debt free in three or four
years and you will be offered the help you need to
keep out of the situation that you are currently in.
While your credit score will not be effected an
entry will be placed on your file. The entry on your
file will generally say "DMP" or
"credit counseling". This entry is put
there to you from obtaining additional credit cards.
Once you have completed your credit counseling this
entry is generally removed or updated to reflect
that you have finished the program.
One thing that will effect your credit rating is the
promptness of your credit-counseling agency. When
you are in a credit-counseling program you will give
the agency a monthly check that they will use to pay
your creditors. If the agency does not pay your
creditors on time or in full your credit score will
be impacted. Be sure to check out the history of
your credit-counseling agency to avoid this.
As you might assume, committing to a
credit-counseling program does require a lot of work
and conviction from you. The hardest part for many
people is to break the habit of reaching for a
credit card to pay for a bill that just came in the
mail. The second hardest thing for most people to do
is to learn to live within in their means. Everyone
likes instant gratification and often we feel
entitled to it, but perhaps if we had shown a little
more discipline in the first place we wouldn't need
credit counseling now.
As you can see, credit counseling is a good and
reasonable option if you find yourself with too much
debt. Credit counseling will not effect your credit
score and will ultimately make you a better person
as you will learn better skills for handling your
money. If you find yourself slipping into revolving
credit card debt problems make sure you take the
correct steps to resolve the problem before you are
forced into bankruptcy. |
