If you are having problems getting credit, it is probably a good idea to consider credit counseling. The individual counseling programs range from one month to three years in length.
Depending on your situation, you will be assigned an industry expert or an experienced and licensed counselor who can help you build your credit score and get you the help you need.
The total of all credit card debt
One-month counseling allows you to make one payment toward the total of all credit card debt. It is not intended to pay off your balances, but it is for just short term credit control.
These are designed for those who have had their first credit counseling session and wish to stay with the same company but are looking for help managing their finances in a more sustainable way.
Three-year counseling is meant to help you build a sustainable payment plan that will work for you. You will be working with a professional who will help you determine how to cut down on your credit card debt and then come up with a realistic budget that is affordable. Your counselor will also help you determine if you can handle a more structured plan and keep track of your monthly payments.
If you feel it is time to move on from your credit counseling program, contact your counselor about transferring your credit card bills to another company. If they do not have an alternate program, talk to them about switching the phone bill and your utilities to a company that offers you on-time payments and other benefits.
The Federal Consumer Credit Protection Act of 2020 requires that each creditor that receives a government payment be required to inform the consumer of the terms and conditions of the payment plan. Before agreeing to any credit counseling program, it is recommended that you investigate and compare the available programs to make sure that the services offered are effective.
Most programs have reasonable fees and benefits
That should provide you with more money in your pocket and less debt to deal with. With the advancement of the internet, there are now multiple choices for you to choose from.
An advantage of working with a financial counselor is that they can assist you to establish a realistic budget and what will not be acceptable in paying your bills. They can help you figure out how much you can afford for day-to-day living expenses and how much you can afford to save for your future. You will also get advice on building your credit and finding financial mentors to help you with your financial problems.
A major benefit of going through credit counseling is that you will be able to reduce your debt significantly without the fear of being turned down by a creditor. Because creditors don’t want to lose you as a customer, they often are willing to reduce your interest rates and waive late fees, which will ultimately lead to a lower monthly payment.
If you do find yourself needing more money than what you currently have available, then consider a debt consolidation loan. A debt consolidation loan will allow you to combine your high-interest rate credit cards with your low-interest rate secured loans into one payment that is much easier to manage.
There are two ways that debt consolidation can be helpful
A short term and a long term solution. If you were previously late on your credit card payments, then debt consolidation may be a good option because your new monthly payment can be lower than the amount you would have originally been paying.
If you were to consider debt consolidation if you have paid your credit cards on time, then a longer-term approach would be preferable because there is less risk to you. If you were to delay making payments for a few months, you can usually make up the difference by selling your credit cards and adding up the amount you owe.
You should always remember that credit counseling is a valuable tool that can help you develop a budget that is financially sustainable and will help you avoid the temptation of further damaging your credit. By learning to manage your finances more effectively, you can build a long-term solution to getting back on your feet financially.