If you are overwhelmed with bills you may be wondering where to turn to for credit report repair. Basically, you have three options.
You can choose to education yourself about credit report repair, you can work with a credit report repair company or you can enter credit counseling.
Depending on your situation, all three options can be a good decision. Learning about credit yourself is a great way to go! It’s the most cost efficient method and once you have the knowledge it is yours for life.
Working with a company that provides credit report repair services cans also work. The key here is doing your research and selecting a reputable company.
But what about credit counseling?
The truth is that credit counseling has its place but it isn’t a decision to enter into lightly. Credit counseling should be saved for those who are buried in debt, with no other alternative.
Why?
Although that fact that you were in credit counseling isn’t factored into your credit score, it will affect your ability to get credit in the future. Every lender has a different policy, but I have actually worked for lenders who were happy to lend to someone after a bankruptcy but would not consider working with someone with a history of credit counseling. Crazy, but true!
Still, if bankruptcy isn’t an option for you, using credit counseling as a method to repair your credit report can be a better option than years of delinquent payments and collection accounts.
A good credit counseling service will serve several functions. First, they will help you evaluate your current situation. Then they will help you develop a plan to get out of debt and educate you on how to manage your finances in a better way. They will help you learn how to make smarter financial decisions.
Debt management is one of the key functions of credit counseling services. The company will first negotiate with all of your creditors to get you lower interest rates and lower payments. Once this is done, you will make your monthly payments directly to the credit counseling company. It is imperative that you still review your monthly statements to ensure that your payments are being made on time and that all negotiated terms are reflected in your account.
It is important to note that most of the time, debt management services only apply to credit card debts. Your home loan, car loan and any old debts will need to be taken care of outside of your program.
Many credit counseling companies will ask that you close all of your existing credit card accounts and agree not to get any new credit. While it can be a good idea to not get any new credit, if you are interested in credit report repair, I don’t recommend closing any accounts. Doing so will actually lower your credit score. The best thing to do is cut the card up and promise yourself that you will not get a new one.
The cost of credit counseling can vary widely. Most companies have both an initial set up fee and a monthly payment. You should always do your research prior to selecting a company. The internet is a great place to get debt counselling info.
While credit counseling certainly isn’t the choice for fast credit repair, it can be a solid method to avoid bankruptcy.
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