Credit counseling = bad news?

[sharimcm 0]

I spoke to my mortgage lender yesterday about "options" of what needs to be paid off and by when to get a few extra thousand dollars added on to my "authorization to build." She mentioned a few things of how to build the FICO score back up, then said, "whatever you do, DO NOT do any type of credit counseling." She said it was worse than bankruptcy. Basically, my question is does anyone have personal experiences with this? I've decided not to do it and pay things off on my own, but I'm curious to know if what she said was true.

Thanks!!

"I had a dude tip his black cowboy hat to me after I provided him with a condom outside my hotel room at 3-something in the morning." -myself

[Andrewwhyte 1]

I dunno but it sounds like the cop telling you a lawyer isn't really in your best interest.

[DJL 232]

Quote

I spoke to my mortgage lender yesterday about "options" of what needs to be paid off and by when to get a few extra thousand dollars added on to my "authorization to build." She mentioned a few things of how to build the FICO score back up, then said, "whatever you do, DO NOT do any type of credit counseling." She said it was worse than bankruptcy. Basically, my question is does anyone have personal experiences with this? I've decided not to do it and pay things off on my own, but I'm curious to know if what she said was true.

Thanks!!

Yup, the best way out is to set a budget and pay it off. Most debt consolidation uses rates that are barely better than a decent credit card. For the damage it all does to you it's not worth it.

"I encourage all awesome dangerous behavior." - Jeffro Fincher

[lawrocket 3]

They've got ups and downs. On the one side, credit counselors can help in lowering payments and pay pennies on the dollar. However, sometimes these payments for less than the full amount are reflected on credit.

Your credit rating is nothing more than your "reputation." It is your reputation for paying back the money that was lent. If the reputation is one of a person who pays back only a portion of what was borrowed, you will have a harder time getting credit.

And it may be worse than bankruptcy because after a bankruptcy, new debts cannot be discharged in ANOTHER bankruptcy for at least a couple of years (I don't know anythign about BK, so cut me some slack).

My wife is hotter than your wife.

[NWFlyer 2]

Here's some info on the impact it will have on your credit, even if you do go to a legit agency. Damaging, though not as damaging as bankruptcy (yes, they are three different articles though the links look identical).


http://www.fool.com/personal-finance/credit/2007/07/31/credit-counseling-basics.aspx?terms=credit+counseling&vstest=search_042607_linkdefault
http://www.fool.com/personal-finance/credit/2007/01/29/should-you-get-credit-counseling.aspx?terms=credit+counseling&vstest=search_042607_linkdefault
http://www.fool.com/personal-finance/credit/2004/01/29/credit-counseling-confusion.aspx?terms=credit+counseling&vstest=search_042607_linkdefault

"There is only one basic human right, the right to do as you damn well please. And with it comes the only basic human duty, the duty to take the consequences." -P.J. O'Rourke

[ScottishJohn 25]

Have a look on the Motley Fool Forums for personal Finance http://boards.fool.com/boards.asp?fid=10104 and you can ask for advice ANONYMOUSLY without it having any effect on your credit rating.

Users in the uk can look on the UK site
http://boards.fool.co.uk/Index.aspx
if they need any advice.

John

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If you think my attitude stinks you should smell my fingers

[Shepp 0]

Absolutely bad news! Consumer Credit Counseling Services (CCCS) should be used only as a last resort before filing bankruptcy. I used one a few years ago, and it destroyed my credit rating.

Here's how it works: the CCCS negotiates a lower interest rate with your creditors (which in turn will lower your payments and payoff time). The creditors then cancel your accounts - all of them - not just the ones you choose to add to the debt reduction program. You now have no credit lines available, you're paying balances on dead cards, and the credit history you built with those cards is completely gone. That history makes up 35% of your credit rating! 35% of nothing is...

Good luck!
Shepp

Experience is a hard teacher because she gives the test first, the lesson afterward.

Accidents don't just happen. They must be carelessly planned.

[Nightingale 0]

Credit counseling is NOT worse than bankruptcy, provided you've got a competent firm doing it. They can negotiate with your creditors and make it part of the agreement that they will not put a black mark on your credit.

I used these guys a few years back, and they were fabulous, and it was the best decision I ever made financially. Saved me thousands of dollars, and no black marks on my credit.

http://www.debtsynergy.com/html/about.html

[nanook 1]

I've used CCCS years back. If it damages your score, it more than likely will be during the times you under the program. At this point, why would one need a good credit score anyways? You shouldn't be financing something new at that time. I still have in my credit report an old credit card that shows that it was paid off utilizing CCCS; my fico scores are still low 800's (high 800's in Trans Union).

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