If you are having trouble paying your credit card debts, a credit counseling company can help you. Apart from working with you to develop a personal financial plan that will help you pay your debts, these companies also negotiate with creditors for debit consolidation programs that will combine your unsecured debts into a single consolidated debt. This means that you will make only one monthly payment, and usually enjoy lower payments and interest rates. You may also enjoy a reduction in over-limit fees and finance charges, as well as having a shorter term to pay off your debt.
There are some things you should consider before signing up with a credit counseling company. One is that you may take a hit in your credit score as some lenders might consider you a bad credit risk. Another is that you should not sign up for counseling if you are still able to make your monthly payments and just want a lower interest rate; you can either ask your credit card company for a lower rate and threaten to take your business elsewhere if they don’t, or take advantage of the many debit consolidation offers from banks and other lending companies.
If you still think you should go for credit counseling, investigate any companies you are interested in carefully to be sure they are reputable. Make sure that they are members of the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling. Also avoid those that charge you high upfront fees and those that make unrealistic promises, such as telling you you’ll be able to settle your debt for a fraction of what you owe and without any effect on your credit score. But if you find a good company, be assured that they will help you find a debit consolidation program that will eventually free you from your debt problems.
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