Lainan
Is a Consumer Credit Counseling right for you?
Maintaining a good credit record is important to determine your worthiness and keep your interest rates on reasonable levels during application. We all want to give a good life to our loved ones but sometimes things get too out of our control and we tend to experience a bad credit situation. These circumstances lead to an increasing number of consumers to turn to credit counseling agencies for help.
There are a lot of debt relief solutions that one can devise to solve your debt problem. The most common of all is the consumer credit counseling which holds financial education through non-profit organizations. They also have the money management courses not as easy Twitter, though. These institutions are tied up with a repayment plan which enables you to pay off your debtors through payment schedules set by your credit counselor. Even though getting sessions could the best solution for some, these are the limitations of this option:
1. Not all types of debts are included
The counsel cannot deal with all types of debts. Secured debts (mortgages, car loans) and current utility bills (electricity, water) are not included in their debt repayment plan. If you belong to these problems, their services are not right for you.
2. Principal debt can’t be reduced.
Yes, they can’t help you in reducing the amount of debt principal. You still need to undergo debt settlement services or debt negotiation. Although, the credit counselor may help you with:
o Secure a waived interest rate according to your creditors.
o Maintain your monthly debt payment schedule up-to-date and make sure that what you’re paying is within your current financial capacity.
3. Credit Rating Protection is not assured
Participating in counseling services will not assure you that your credit rating will be protected. It can only guide you in taming the negative effects of your credit report to the authorities. Preserving the positive status of your credit account is always your responsibility.
In conclusion, a debtor must first understand the limitations of what consumer credit counseling can do before choosing this type of debt relief solution. Credit counseling services can provide an answer but it could not be right for every case.