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Credit counseling benefits
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Your credit score determines whether you have good credit or bad credit. A bad credit can be your worst nightmare wherein you will end up paying more in interest when you request for a loan either at your bank or at a credit union. It is important to travel down the memory lane and stop and think how you landed up with a bad credit in the first place and what can be done to help you attain a good credit. If you are having a tough time paying your bills you might need to get some expert advise on credit counseling or debt programs. A credit counselor can help you protect from bankruptcy with the help of debt management plans and worksheets. Planning a budget and sticking to it is critically important part of credit counseling and helping you get out of debt at the earliest.
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Credit counseling benefits
How is your credit? Do you know what your credit rating is? If you are planning on buying a car or a house or similar issues, you will need to have good credit, bad credit can affect your ability to get a loan. Bad credit can haunt you for the rest of your life. If you are having some trouble with credit, you need to get it under control before it is too late.
Your credit is a rating based on bills you have, loans you have taken out and other issues such as credit cards. When you pay off a large bill or make regular and on time monthly payments, they report this to the credit agencies giving you good credit. When you don't pay or fall behind, they report this as a negative mark on your credit. These marks help you get future credit that you may need or want.
Credit lets you buy something without having to pay the full amount at one time. The most common forms of credit are credit cards. You also use credit when you buy a house and usually when you buy a car as well.
You may want to see credit counseling if you feel you need help with your credit management. If you are falling behind on bills, having trouble creating a budget, don't know how to create a budget or have out of control credit cards, you can benefit from credit counseling.
A counselor may be able to help you avoid bankruptcy. They can help you get your life back on track and organize your finances to improve your credit.
Credit counseling is not just for people with bad credit. In fact, it is a good idea to get the counseling as prevention before you get bad credit. Young people, college students, newly married couples and more may get credit counseling. If you have just won or inherited a large sum of money, you may get credit counseling. These are all situations where you might want advice from an expert on how to manage your money.
James Hunt has spent 15 years as a professional writer and researcher covering stories that cover a whole spectrum of interest. Read more at www.1st-in-credit-repair.info
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The truth about credit counselors
The average American is a mere three paychecks away from facing huge, potentially devastating financial difficulty. Each year, more than a million Americans turn to credit counselors to try to help themselves regain control of their financial burdens. But just how the credit counseling business works is a mystery to most consumers. What's involved when you hire a credit counselor?
HOW CREDIT COUNSELORS WORK
It may come as a bit of a shock, but the first thing you need to understand is that consumer credit counselors don't work for YOU! That's one reason their ads on television, radio, and in your email box shout, "Our services cost you nothing!" However, any business needs to derive income from somewhere, so if they're not charging you, who does pay them? In truth, they work for the lenders. Here's how it works:
Regardless of what their commercials would have you believe, credit counselors don't renegotiate the overall amount of your debt--that is, the total principal balance you owe to your creditors. Instead, they negotiate with the various lenders to decrease your interest rates. For instance, let's say that you're paying somewhere around 18 percent on the charge card you want help with (some stores still charge as much as 21 percent). A credit counselor will contact the cardholder and negotiate a lower interest rate--sometimes as much as half the original rate.
That's the good news. The not-so-good news is that your minimum payments will still be based on a 90/10 split, meaning that 90 percent of your monthly payment will still go toward paying interest on the card. That means, as is the case with any credit card payment, it will be well worth your while to pay a little more than the minimum each month, in order to whittle down your principal. It will save you significant amounts of money in the long run.
But how can credit card companies continue to make money by cutting interest rates in half, and what do they have to gain by doing so? The first reason is because they know that it's better to get something, which they'll do if you continue to pay them, even at a reduced interest rate, than to risk having you default on the entire amount. The second reason is because, even at the reduced rate, the lender is still making a healthy profit. They have borrowed that money at a significantly lower rate--sometimes as much as 66 percent less than the rate they'll be charging you. (That's why the financial institutions have big buildings; they make huge amounts of profit.)
Credit counselors CAN save you money, there's no doubt about that. But don't be fooled into thinking that they work for YOU, because they don't. In the end, credit card companies love credit counselors, because the counselors truly work for them. That's why you don't pay for credit counseling services. The credit card companies are happy to pay them for you.
Copyright © Jeanette J. Fisher
Jeanette Fisher teaches how to get out from under credit card debt and how to use credit to make money. Free ebook "Credit Tips" http://worryfreecredit.com
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Credit counseling benefits
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