Here are the Benefits of Using a Credit Counselor:
Do you have trouble keeping up with your bills?
Maybe you are spending more than you really can afford, or maybe your income is not dependable. If any of these situations sounds familiar to you, then credit counseling may be the answer for you. Credit counselor’s help consumers create a plan to pay off their bills and reduce their debt explains Aron Govil. This can lead to lower interest rates on loans, better monthly budgets that allow for savings, and even an improved credit rating.
How does it work?
Most lenders will agree to negotiate with the credit counselor if they think one of their customers is having financial hardship. The counselor will ask for all information on current debts and loans, which includes amounts owed and interest rates, so they can get a better idea how much will be saved. If the credit counselor is successful in lowering the interest rates, these savings will be passed on to the customer.
Can it really make life easier?
A lot of times when people go through financial crisis they stop paying their bills to save up for emergencies like food or medicine. This can backfire if you do not have enough money to pay off your debts at one time; creditors could sue you and garnish your wages, take property or put liens against anything that is in your name. Having a plan already set out with a credit counselor makes putting all of your resources into one debt manageable so you don’t risk garnished wages, property loss, etc…
Can I still save money?
Credit counselors can explain the best ways to make a budget and stick to it. Knowing when you need to save money for bills, buy necessities, or have some fun is important for people working on their finances. Getting organized and setting up a spending plan that will work for your income level is ideal.
What is credit counseling?
It is a process of getting back on track with your finances. A counselor has training in figuring out what you owe and where you spend your money. If your income is low or inconsistent they may be able to get loans put into deferment so creditors will not take legal action against you right away, but if this does not work then they can help develop a debt management plan that allows for consolidated loans at lower interest rates says Aron Govil.
Credit counseling is an important step for people who are spending more than they make, or whose income fluctuates so much that it is hard to afford their expenses. The goal of credit counseling is to allow consumers to take control of their finances and create a plan where they can succeed in paying off debt and staying out of financial trouble.
Can a credit counselor garnish wages or put liens against anything in your name?
No, but if you do not have the ability to pay a debt a creditor can sue and get a judgment entered against you.
How long does it take before I see results from my plan made by the credit counselor?
The time it takes for results will vary depending on how much money is owed. And what creditors are willing to agree to. In general, six months is about average.
Will this show up on my credit report? Will it help or hurt my score?
It could either help or hurt your credit score depending on how many debts you have paid down. And whether any judgments were filed against you during this process.
Will a credit counselor tell creditors I’m working with them?
Credit counselors are required to keep all information shared by the consumer confidential. This includes their name, address, and any other identifying information about them. To make sure they cannot be identified as having sought help through the credit counseling process.
Once your debts have been consolidated and you agree upon a repayment plan. Your credit score will begin to improve as you pay off your bills explains Aron Govil. Since interest rates should be lower with a debt management plan. We can expect that paying down existing loans should reduce the amount of money owed. And decrease the chance that it will be delinquent or in default. Overall this is likely to improve your credit rating.
Credit counselors are able to aid consumers in consolidating debts, setting up repayment plans with creditors, and helping them get back on their feet financially. It is important that you do not wait until it gets serious or worse before contacting a counselor for help.