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Credit Counseling vs Debt Settlement

Knowing The Facts About Credit Counseling Vs Debt Settlement

Credit counseling vs debt settlement is important, because you want to do the right thing when it comes to recovering your credit score.

Your credit score is probably the most important thing to people like financial advisers and lenders, credit card companies, whether they are for stores or major credit cards, among others. Even your car insurance rates are quoted depending on your score. So it is important to know whether to go to credit counseling or settle your debts, or both.

Credit counseling is helpful if you have too many debts and you are starting to drown in them. You have overspent, you have realized it too late, and you need help before it adversely affects your credit. There are reputable credit counselors that do not even charge you for this service. They can be certain companies, or you may find help at universities, and your accountant may even be able to give you some insight.

Probably the best way to find a good credit counselor is through word of mouth. So, ask around. You should not be embarrassed, as most people have been in your situation before, whether they want to admit it or not.

Debt Settlement is for when you cannot pay the bills you have. It is impossible to see the light at the end of the tunnel, when you receive your paycheck and you compare it to what you owe. You need to settle of these debts, and that means calling each creditor.

There are people you can hire to do this for you, but they are going to charge you. The last thing you need is another debt. They also may not tell you the whole truth about what will happen to your credit rating.

Debt settlement is not a good thing for your credit score. It will be obvious to a financial lender when he sees that you owed a department store five thousand dollars and they settled for three thousand. In their minds, you overspent and did not pay off your debt in a responsible manner. And it will stay on your credit record for seven years.

Another word of advice is that it will be up to you to make sure it comes off at that time. There is no red flag that goes up, they do not send you an email. You will need to contact all three of the major credit bureaus that your credit is reported to to make sure that after the seven year period these debts have been removed from your credit report. If you have a bankruptcy, and certain other adverse credit problems, it will not be removed for ten years. You should also know this when you seek debt settlement. If someone tells you that it will come off your credit report once they settle the debt for you, this is not entirely true. It will state that you settled the account, not that you paid responsibly each month.

You must weigh the pros and cons when it comes to credit counseling vs debt settlement. You may need to contact one of the reputable debt settlement, and then it may behoove you to seek credit counseling before you start to overspend once again.

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