How your credit score is affected by a Credit Counselor?

Some people are concerned that consulting a credit counselor will reflect poorly on their credit score.  This is just not so.  First of all, if you feel you may be in need of credit counseling services, chances are that your credit score may have already taken a hit.  There could be delinquencies on your report before you even engage a credit counselor.  If that is the case, those delinquencies will remain on your report until time elapses and they are removed in the chronology of things.

The credit counseling service itself reports your conference and, ultimately, your repayment plan to no one.  They are sworn to confidentiality.

As the credit counseling agency negotiates your repayment schedule, they will contact your creditors with an offer to accept this arrangement.  Your creditors have the option to accept or decline your repayment plan.  In the event they accept your offer through your credit counselor, they have the right to make a note of this arrangement on your credit report.  This notation in no way affects your credit score, but if you miss payments or are late in keeping up with the promised schedule, such misdeeds will negatively affect your  FICO score.

Agreeing to a negotiated repayment plan will stop you from getting credit until after you have met the repayment promise, but it is not viewed to be as negative as a bankruptcy history.

Before deciding on a suitable credit counseling service, ask for references.  A credible company will put you in touch with previous customers who have had good results in debt consolidation from this company.  This is your financial future; don’t rely on just some ad or direct mail piece to point you toward the credit counseling service you should use.

Make sure your counseling service is accredited.  There are practices and standards maintained by the American Association of Debt Management Organizations.  Credit counseling services with their accreditation will be following required practices and abiding by ethical standards.

Check with the Better Business Bureau.  If your credit counseling service is a member in good standing of the Better Business Bureau, it shows that they have had few complaints and are willing to engage in resolution of any problems.  Call your local BBB and ask for information on whatever counseling service you may be considering.

Avoid for profit counseling services.  Seek out non-profit counseling services, as there is a good chance that their advice will be independent of any outside influences.

Most of all don’t allow your apprehension, based upon misunderstandings; stop you from getting the help you need.