Credit Counseling Can Be a Valuable Tool

But is it for You?

If you are in debt, and who isn’t, you may find that at some point in time you would benefit from the services of one of the many credit counseling agencies that abound in every city and state. The fact of the matter is that we are a nation of debtors for the most part and many of us find that we are slaves to interest rates. The beauty of working with a legitimate credit counseling service is that they will contact your creditors on your behalf and negotiate a lower interest rate for your debts.

It is important to keep in mind that while many may charge a nominal fee for their services; most of them earn the bulk of their money in fees (much like commissions) earned from the creditors they are working with. In other words, the creditors are the ones actually paying for their services. That being said, credit counseling is a great way to lower your total payments as well as your monthly payments. One thing that many people find helpful (and completely worth the fees) about credit counseling is the fact that this service doesn’t require a lot of time running around, mailing and emailing, or waiting on hold with your creditors. The service does this for you and since time is money, most people feel that this service alone is worth any fees they may charge.

Credit counseling isn’t for everyone however. This is primarily for people who have large amounts of credit card debt. If your bills are primarily student loans or medical bills, then credit counseling won’t really be able to offer much in the way of assistance. However, if you have high credit card debt, they can work to get the interest rates lowered considerably. Over time paying a lower interest rate can save a huge chunk of change.

Some credit counseling companies will even work things out so that you write one check to them each and every month and they handle the payments to your creditors. This works very well for many people who have trouble remembering to mail 5 or ten payments each month or prefer writing one check for easier record keeping. This also helps to insure that your payments are made on time each month. Creating a history of on time payments over time will go a long way towards drastically improving your credit score.

There are some drawbacks for this type of service. First of all, the accounts that you register will most likely be closed so you can no longer charge these items. You are also not allowed to open new charge accounts while you are using this service. Credit counseling is a valuable service, particularly in today’s economy but there is a price to pay for saving your credit. You must be committed to the credit counseling program and willing to do what is necessary in order to eliminate your debt, while establishing responsible spending habits. Establishing good habits of responsible spending while in credit counseling can help you keep your debt manageable for the rest of your life.