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The Pros and Cons of Consumer Credit Counseling Services versus Debt Consolidation Loans

When you’re in a lot of debt, it makes life more stressful and less enjoyable. By the time most people see the error of their ways, they’re already in so much debt that it will take them many years to dig out from it. Fortunately, there are options that can help you get your debts paid off more quickly.

Two of those options are credit counseling and getting a debt consolidation loan. With credit counseling, a third party negotiates lower payments and interest rates for you. You then start making one monthly payment to the credit counselor, and he forwards the monthly payments to your creditors on your behalf. With a debt consolidation loan, you simply take out a loan, use the proceeds to pay off your existing debts, and then repay the loan.

Both of these methods can help you successfully repay your debts. Which one is best for you depends on your unique circumstances. Here are some pros and cons of credit counseling as opposed to debt consolidation loans to consider.

Pros

* In addition to negotiating with your creditors, a credit counselor will help you work up a budget. This will help you pay off your debts more quickly and better manage your finances.

* You won’t have to take on an additional loan if you get credit counseling. Getting a debt consolidation loan gives you access to more credit once you pay off existing bills, so if you’re not careful, you could end up in more debt than you were in to start with.

* A credit counselor will take your income and expenses into consideration when negotiating with creditors. That means that you should end up with a monthly payment that is affordable to you. If you get a debt consolidation loan, the payments may or may not be affordable.

Cons

* When you undergo credit counseling, it is noted on your credit report. You won’t be able to get additional credit until you have repaid your debts in full. That will prevent you from getting further in debt, but if you have a legitimate need for credit, you’ll simply be out of luck.

* Credit counseling isn’t free. There is a fee tacked onto each monthly payment that goes to the credit counseling agency. Usually this fee is reasonable, but it’s important to know exactly how much you’re paying for the service.

* With the credit counselor making the payments to your creditors, there’s no guarantee that they will be made on time. You could be responsible for late fees if they’re not, even though the delinquency was through no fault of your own.

Credit counseling and debt consolidation are both viable options for those who are in too much debt. But either way you go, it’s crucial to carefully consider your options and check out any agency or lender you choose to work with. Doing so will help ensure that you make the right choice and don’t get burned.

Bad Credit Credit Cards: Are They A Scam?

Are you looking for bad credit credit cards? You may be finding it hard to get approved for loans and other forms of credit. Then you need to read this article, where we will set out some points you must watch out for when you are applying for credit cards with a bad credit score.

Credit cards are almost a necessity these days. It is true that many times you will see advice for people wanting to get out of debt where it says to cut up all of your cards. Now in general this is good advice, because it is true that credit cards are not generally the best way to manage your debts.

However, there are many things you might want to buy that you need a card for. For example, you can often get a better deal by buying online and that requires cards. Also if you are buying higher priced goods such as a car or furniture, the store clerks are likely to think it is very weird if you turn up with hundreds or thousands of dollars in cash. They may even be suspicious and think you are passing fake bills or money laundering, and refuse to sell to you. People just don’t buy high ticket items with cash these days! So you might want to make sure that you keep at least one card.

Another reason why you might want to keep a card when you are working on getting out of debt is that having credit and making the payments regularly is one way to improve your credit score.

Of course the ideal situation is to get yourself into a position where you have a good credit score. Then you would have no trouble getting loans and other forms of credit at favorable rates. But the irony is that it is usually the people with bad credit history who are in most need of credit. And lenders can get away with charging more for it, because the people often need it bad.

At the same time of course the lenders will justify the higher rates by saying that they are taking more of a risk with people with a bad score. It is more likely that the person will declare bankruptcy and they will never see their money again. Of course banks and finance companies are not charities. They are looking to make a profit out of lending money. So if they can charge you a higher rate, they will.

The actual cards that are available to you will depend on the country that you live in, but one thing you can be sure of, and that is that not every finance company will offer bad credit credit cards. You may not have a lot of choice but still it is very important to look carefully at the fine print. Some of these cards are a pretty good deal and others are definitely not.

It is not just a question of interest rates. You will often find that a card which seems to offer low interest rates has many other charges that can almost cripple you financially. For example, there may be a sign up fee, or a special extra set up fee for a person with a low credit score. There could be yearly fees and even monthly account maintenance fees.   In some cases these can add up to more than $100 a year and $200 in the first year. All of these fees must be paid even if you do not use the card and often, even if you have a zero balance.

So in most cases, you could be better off paying a higher interest rate and lower additional charges, especially if you have a good chance of reducing your balance. Don’t be taken in by the ads. Always check the fine print when you are considering signing up for bad credit credit cards.

Consumer Credit Counseling Service: What To Look For

Are you facing any problems regarding the management of your personal finances? If you are, you should probably take a look at the option of consulting a consumer credit counseling service. This a service that is generally open to anybody. You can either visit in person or, if there is no convenient office in your area, you can book a consultation by phone or online.

Credit counseling can help you with many financial questions or difficulties. These can include disputes with lenders, dealing with debt collectors, correcting your credit history and improving your credit score, establishing and sticking to a budget that works for you, and many other issues.

Since debt is an issue that is more and more of a problem for many people in these difficult times, you will probably see a lot of ads for these services online, on TV and in other media such as newspapers. How do you know what to look for and whether you can trust them to provide you with a good service?

First, you can look for whether the service is registered or regulated by any national organizations. If they are a member of one of the major regulatory bodies in your state or country then you can be sure that they follow certain guidelines set down by those bodies. This can give you some protection.

Second, you should check whether they are independent. Some so called consumer credit counseling services are really just agents for one or more lenders, so instead of giving you independent financial advice, they will push you to take out a debt consolidation loan that they will get a commission on. Of course in some cases debt consolidation may be your best option, but you want an independent service that gives you all of the options, not just the ones that make money for them.

Keep in mind that you may need to pay to get independent advice. It is tempting to go for a free consultation but remember that if the company is providing a free service to you, it must be making its money some other way and often this will be by commissions paid to the counselors when you take out loans or credit cards that they recommend. So they have an interest in recommending the solutions that will make them the most money in commissions, not necessarily the solutions that are best for you.

You can sometimes get advice that is both free and independent from a not for profit organization. This may include your local social services office or a charity. Find out what is available in your area. If you are interested in a service that is run on commercial lines you can also check the register at the Better Business Bureau to find out whether there are any complaints about the company before you get involved.

Credit and debt counseling can be a life saver for some people and often it is worth the small fee that you may have to pay. The services can be wide and varied. They will often save you money right away by finding ways that you can cut down on the interest that you are paying every month. In addition, the counselor will help you to work out a budget and a repayment plan so that you can begin to clear your debts or at least avoid getting into a worse situation.

In summary, just about anybody who is having trouble managing their finances can benefit from consulting a credit counselor. Just be sure that you understand how the consumer credit counseling service is funded and whether they are giving you truly independent advice.