Maintaining a healthy credit record can be a difficult yet serious task. What one buys and invests in can improve or damage a credit record. From credit cards to financing cars to other everyday bills, people – especially students – often become disillusioned by easily obtainable credit cards and the “buy now pay later” mentality.
The average consumer was hailed savior of America’s economic slump that was experienced soon after Sept. 11, as people everywhere were encouraged to put money back into the economy. Now many people are dealing with the consequences of over-zealous shopping. People are becoming concerned with their financial fate now more than ever, as in 2002 Consumer Credit Counseling Services (CCCS) experienced a 38 percent increase in call volume since Sept. 11. With the help of this kind of counseling and special online resources, consumers can pay down their bills with one reasonable monthly payment while becoming more familiar with their credit record, both with less hassle and more understanding.
Maintaining your credit is a tricky thing. One day you are on top of it all, paying your credit cards in full every month; the next you wake up to realize that your spending has somehow caught up with you. Those credit cards are too high to pay off every month. In fact, you may have resorted to paying the minimum payment requirement for months, maybe even years. What is the point in throwing away money like that? All the minimum payment covers usually is the interest, so your balance will never go down that way. Here are some reasons why credit counseling is not something to be afraid of.
- Credit counseling is the middle ground for handling debt: it is more effective than trying to pay off outstanding bills yourself, and less extreme than declaring bankruptcy. Unlike bankruptcy, debt consolidation allows you to pay off what you owe while still giving you the freedom to obtain more credit in the future.
- Credit Counseling is not expensive. Usually there is a small fee and the consolidation company may ask for contributions because many claim to be non-profit organizations. This contribution is optional. As far as the monthly payment is concerned, the company takes a look at what you owe in contrast with your income and works to make a payment that is comfortable for you. It is not super low, because these bills need to be paid off somehow, but it is not ridiculously high either.
- No more phone calls from creditors! Perhaps this is the best reason to consider this counseling. Creditors have no reason to call if they see that you are making effective payments. Plus, some companies that offer this counseling also work for the creditors, so they are happy to work with them.
- Although you cannot use the credit cards which are being consolidated, counseling does not damage your credit. If anything, you are helping your credit by improving your debt to income ratio.
- Are there alternatives for working with a non-profit organization? Yes, there are other debt consolidation companies who do not work with creditors as mentioned before. This relationship can have its advantages and disadvantages. The downside to this is that most non-profits report to the Credit Bureau. You will also not be allowed to use any credit cards that are being consolidated. With other companies, most can get creditors to re-age your accounts to make them current if they are delinquent.
Most importantly, consumers should check their credit reports regularly before they think about debt consolidation. It is possible for wrong information to appear on one’s credit report, so make sure all information on the report is accurate.
By Kelley Caner