Benefits of Credit Counseling

Credit counseling allows borrowers to take control of their financial problems by getting education about money management. A counselor may act as a mediator and can assist in negotiating affordable payment arrangements for the consumer. The goal of credit counseling is to help the borrower get out of debt faster and make better financial decisions. Credit counseling is a beneficial option for those who have some income and savings to support lower monthly payments. The following is a brief guide to the benefits of credit counseling:

The Benefits

  • Credit counseling can assist borrower with their money management skills. They can learn to budget their funds or they can learn how to create and maintain a budget.
  • The borrower does not have to worry about making a deal with lenders directly. Negotiations with creditors are commonly handled by the counselor.
  • Negotiations with lenders could lead to a reduction in your overall amount owed. A certain amount of debt may be eliminated, and interest rates may be lowered.
  • Lenders and collection agencies will stop calling the borrower to demand payment once payment arrangements have been made with the counselor.
  • Credit counselors may also arrange a credit card consolidation loan, so that all debt can be reduced to one low monthly payment.
  • Once bills are consolidated, interest payments will ultimately be much less than paying separate bills.
  • Late fees will be eradicated.
  • Your credit score will increase after a few timeley payments.  While the delinquent payment will never be removed, timely payments will help increase your score.

It is important to note that credit counseling is different from debt settlement. Debt settlement involves negotiations that result in reducing the overall amount owed. No advice or education is provided, and the mediator may ask that you stop payment on your accounts to leverage negotiations. While you may be successful at reducing the overall amount owed, your credit score may be fall as a result of non-payment while the negotiations are taking place.


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