Advantages and Disadvantages of Credit Counseling

The need for credit counseling arises when a person needs help in getting out if debt. A credit counseling service makes a debt and expense management plan for you that allows you to meet your essential monthly expenditures along with making payments on your debts.

The advantages of seeking credit counseling are several.

1) A nonprofit credit counseling service will look into your expenses, income and debts systematically. For many people this is the first time that they get a precise picture of their finances.

2) A nonprofit credit counseling service will make a budget plan that is tailor made to suit your needs. You continue to meet your expenses and while repaying your debts.

3) A  nonprofit credit counseling agency can help you cut down your superficial expenses. This may have the long term effect of making you more financially responsible by curtailing irresponsible spending habits.

4) Credit counseling service continues to offer assistance after the counseling session is over.

5) Credit counseling is a fairly quick process where you are usually done in 2-3 sessions. You walk out with your plan and are responsible for following it.

6) There are many state run non profit credit counseling services. It is possible to find one such near you. you will not be required to pay anything for receiving professional advice on your credit situation.

7) Even for the credit counseling services that charge a fee, it usually within the tune of $50-$100. this is a reasonable and affordable amount for most.

8) A credit counseling service is also educational. They inform your of your credit situation and give realistic assimilations. You will begin to understand credit system a little better than you did before.

9) Many credit counseling services continue to offer support and assistance even after the initial sessions are over and your plan has been provided to you.

10) The plan that a credit counseling service makes is flexible and leaves room for future changes in circumstances and situations.

11) If it is determined that your credit situations is so acute that it cannot be resolved by a credit repayment plan, they offer other services like debt management. Under a debt management plan, they negotiate with your creditors for better terms and make the payments on your behalf.

12) A credit counseling service aims to get you out of debt in 2-5 years.

There are no obvious disadvantages of a credit counseling plan.

The only disadvantage of using a credit counseling services that you may land in the hands of a incompetent and non-genuine nonprofit credit counseling service that will make tall claims but will not offer you the assistance that you want. Many nonprofit credit counseling agencies have had their licenses revoked because they have been working for the sole purpose of making a profit for themselves by using dubious and unfair practices like stressing only on controlling consumers into debt management plans. As long as you can find the right assistance you need from a credit counseling agency, you can benefit from that interaction.

Make sure that you do not deal with a credit counseling service that suggests anything illegal at any point of time such as brilliantly stopping payments on your credit cards in order to facilitate debt settlement etc.

The only trick lies in finding the right service for yourself. There are many services that offer to radically increase your credit score by removing the negative data from your credit report. no can legally remove negative information from a credit report that is accurate. Please be very wary of these claims. Especially the ones that you find in the internet. Many of them will take your money and do your credit more harm than good in the long run.

Being in credit counseling does not effect your credit score in any way. Although being in a debt management plan may as you are telling your creditors that you are unable to make the payments on your own and are using a service to renegotiate the terms and make the payments on your behalf.

If you think that you can budget your expenses yourself and save money in order to start paying off your debts, then you can save the fee that you may be required to pay a credit counselor.

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