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WARNING! Beware of Credit Counseling Services (Especially If They Do THIS!)

April 09, 2012 | Comments: 0 | Views: 142

Are credit counseling services legitimate? What do they do? How do they differ from credit repair companies......or are they really just the same thing? And will they really help me lower my bills, or is that just a pie in the sky promise that will be an expensive lesson to learn? In this article we are going to take a quick and easy look at why credit counseling services are NOT a good investment of your time, energy, effort or enthusiasm....and why FREE services can often be the MOST costly of them all. Curious to know more? Continue reading as we take a closer look.

Aren't credit counseling services non profit?

Some are, yes.....but that does NOT mean they are not in it for the money. As a matter of fact, the Internal Revenue Service issued an official "warning" about credit counseling offers that use the "not for profit" label as a way to "trick" or mislead customers and clients into thinking that they are a government service or public interest agency. (while there may be occasional local exceptions, they typically are not)

Most credit counseling services WILL negotiate your debts for you, for "FREE"......

But, they get a PERCENTAGE of what you pay back to the creditors themselves, and are compensated directly by those you owe the money to in the first place. If this sounds like a HUGE conflict of interest to you......you are NOT alone! The more you are able to pay your old debtors, the more "commission" and cash the credit counseling service makes. Period. And for that reason alone, they can't be trusted. (again, there may be exceptions to this on a local level, but this is traditionally how these companies operate)

The BIG thing to ask before signing anything?

Very simple. As intimated in the title of this article, and addressed above, you must find out how (and from where) the company is compensated. How are they paid....and if not by you, by whom? Any counseling service that gets payment or direct funds from your creditors should not be used. End of story.

Another problem with credit counseling is it typically has VERY adverse effects on your personal credit score as well.

Of course, most people in this situation have had their credit affected already, but no question... CCC services make it worse. How? It becomes part of your "permanent record" that you entered into a credit counseling agreement, and this looks like you have difficulty managing your own finances to any future potential creditor, PLUS... it becomes very tough to do "credit repair" in the future.

Is credit repair the same thing as counseling?

Absolutely NOT. (although many credit repair companies will offer you counseling for free, or for a small fee, as part and parcel of the credit repair process) The truth is, credit repair, while MUCH maligned and criticized by the banks and reporting agencies and financial lobby... is very effective and is a much better alternative to counseling for the vast majority of consumers who are having credit problems, either now... or in the past. (And was a personal god send for me as well... on more than one occasion!)

Click HERE to learn how to Improve Your Credit Score 90 POINTS in 90 Days... GUARANTEED!

You Deserve A Second Chance. Get it HERE!

Source: EzineArticles
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