Certified credit counselors work with you and your unsecured creditors (that is, debts without collateral) to create workout plans that avoid settlement and bankruptcy. Consumers often come to us with accounts charging 26% interest or higher, but through our debt management plans, our average client repays their balances in full at just 7 or 8% (depending on who their creditors are), saving them a significant amount every month and even more over the life of the plan. The enrolled accounts are closed, and you’ll make one monthly payment to the credit counseling agency, which is then disbursed to your creditors. Plans usually run from 40 – 60 months, but a few creditors will extend their interest rate concessions to 72 months.
At the time of enrollment in a debt management plan, you may lose points off your credit score because the enrolled accounts will be closed. That’s a fair trade-off for your creditors, who may be substantially reducing your interest rates and waiving your old, overlimit fees. (The credit counseling notation that may appear on your credit report is officially a neutral mark.) Then, as you make your monthly payments through the agency, your credit can improve over time, especially if you follow through on the counseling provided. Only you can control your behavior, so the agency can’t make guarantees about what will happen to your credit standing. Re-establishing a positive payment history will certainly help.
No, it’s not! The only reason to carry a balance is if you cannot afford to pay the entire amount. Carrying a balance results in interest charges, adding to the amount of debt you owe. Carrying a balance and making small monthly payments will also extend the amount of time it will take you to pay off your credit card debt(s).
Checking your own credit report will not affect your credit score at all (those are called soft inquiries.) A hard inquiry, however, will affect your credit score. A hard inquiry is when a creditor or lender checks your credit report to get a better picture of your credit risk before lending you money.
No, you can only dispute information that is incorrect, that is reported in duplicate or that has been on your report for longer than it should be.
Nonprofit credit counseling agencies are not credit repair companies. A nonprofit credit counseling agency can help you understand your credit report and help you make better decisions to help you build strong credit. No one can “erase” bad credit history from your credit report. Only time will do that. If there is an item on your credit report that does not belong or has been incorrectly reported, you can dispute that yourself. You don’t need to pay anyone to do that for you.
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