Credit Counseling Services
Is there a way to reverse the damage that a credit counseling service does to your credit report? Would re-negotiating with the credit card companies and trying to reduce the payoff amount be more beneficial at this point?
When you fill out a loan request, one of the questions are " has customer been in consumer counseling within the past two years." The financial industry looks at credit couseling just like a BK. If you can't negotiate, then do it. It will help you out to get rid of them.
Lori
[addsig]
What's consumer counseling? Is that shrink service for those with bad habit of spending credit card money? Something like alcoholic with the plastic in one and pen in other hand?
Just curious?
Quote:
On 2004-02-21 03:41, omega1 wrote:
What's consumer counseling? Is that shrink service for those with bad habit of spending credit card money? Something like alcoholic with the plastic in one and pen in other hand?
Just curious?
It's more than that. They cut up all your plastic and take over payment of your accounts, supposedly knocking off all the lates and interest. You pay them monthly and they dole it out to the creditors. Only it has gone from one non-profit doing it to a mushrooming industry full of liars & thieves, many of whom hide behind nonprofit status. And to potential new creditors, it looks little better than a Chapter 13.
Apparently, there are obvious similarity with RE guru business. Don't you think?
These services ruin customer s credit. when Im looking at someone s credit . I see accounts closed. late pays . most of the time its too late and you get Derogs. Middle Fico of 620 but the derogs keep the deal from going A paper. and the client is S.O.l. ---- I see this on a daily baisis.
I'm sorry but I had to chime in. No, Consumer Credit Counseling services (the reputable ones) DO NOT hurt peoples credit. There are some that do, such as AmeriDebt which is being sued by the government. Those accredited by NFCC (National Foundation for Credit Counseling) are excellent organizations.
I get real pissed off when people dump on good organizations likes those that belong to the NFCC because they actually help those that are having problems with credit. A personal note: My mother had over 36K in credit debt, given to us by my wonderful father who left when I was 16. My mother couldn't pay those debts. Then she found out about Consumer Credit Counseling Service of Fort Worth, a member of the NFCC. CCCS cut her payments almost in half, most cards went to zero % interest and she is now debt free 5 years later. The only thing shes owes now is her mortgage, car note, and a loan she just took out for some home improvements.
CCCS not only applied her payments correctly, but also drastically improved her credit rating. 5 years ago creditors wouldn't even talk to her. Just last week she walked into Wells Fargo and got a 7K unsecured loan with just her signature. AND because of CCCS she now understands how to manager her debt better and will actually have that 7K paid off within two years.
No, Credit Counseling services do not hurt your credit, if you go to the right ones. Those accredited by the NFCC. In the long run your credit will be better than it ever was before. I recomened everyone who has a large debt load go to them and get help because I have seen the good that can come from it.
Another thing, people say they charge huge fees. Well, for the 5 years my mother was in Consumer Credit Counseling her total fees paid to CCCS were only $600.00. That's right folks. She was charged $10.00 per month for 5 years. So no, she wasn't ripped off.
Thats all I have to say. Just because there are bad companies out there doesn't mean they are all bad. Credit Counseling is a good thing if you get with the right people and will definately benefit anyone in the long run.
Peace.
kingmonkey
You know that is the first complement I have heard about a credit counceling service. About 3 yrs ago (after a bad car accident and not working for 3 months) I almost used one, but held back because of all the horror stories I heard. Interestingly enough I was had been talking to Americredit... Boy am I glad I did not make that mistake. I did all the negotiating myself, but maybe if I would have done things differently I would be doing even better than I am now as far as credit goes. Slow and steady wins the race anyways. I will get to 700 before I know it. Thanks for shedding light on the other side of the coin.
Carpe Diem,
Veronica
Alomst 9 years ago, when I met my wife, she was using CCCS. They treated her well and things worked out great. Of course after we got married I paid off her debt. But until that time CCCS did a good job.
Now that was quite a while ago so things may have changed.
Thanks KingMonkey. That's about the best information I have read on this site. It will help a lot of my clients.
[addsig]
A good apple in a barrel full of bad ones doesn't fix the problem ... one thing you might do is check out any agency you might want to use ... www.epinions.com, the BBB, etc.
CCCS has a consistently good reputation, and I was remiss in failing to mention them. But I don't believe they've spread as far and as fast as all the weasels, and with little advertising they're certainly tougher to find, and it would be way too easy to accidentally get mixed up with a scummy outfit having a deceptively similar name.
CCCS may have been good to some of you but from every lender that I have ever dealt with in the last 15 years, it is not as bad, but similar to a bankruptcy. I like the fact that people don't want to not pay all their debts, but the way CCCS works is they contact the lenders and renegotiate a lower to nonexistent rate of interest, as well as a lower balance. This money came from someones pocket for a pre agreed term, which is being renegotiated to the consumers favor. In busines it's called getting your cake and eating it too.Why should a lender look to lend someone anything, when that person has shown a history, a verifiable history of not paying their debts as agreed?
Good Luck,
Shawn(OH)
Quote:Why should a lender look to lend someone anything, when that person has shown a history, a verifiable history of not paying their debts as agreed?Why, the same reason they lend anyone else money--to make a profit.
Only when someone has had problems in the past, the lender may justifiably require more interest/more down payment/more assurances.
Quote:
On 2004-02-22 18:55, flacorps wrote:
Quote:Why should a lender look to lend someone anything, when that person has shown a history, a verifiable history of not paying their debts as agreed?Why, the same reason they lend anyone else money--to make a profit.
Only when someone has had problems in the past, the lender may justifiably require more interest/more down payment/more assurances.
The point of the quote was to show that the lender has risk as well, and that the likelyhood of default raises drastically when there is a history of slow pay and delinquency. Which lessens the likelyhood of profit. It was more to show that to be successful a potential investor must change his/her way of thinking.
Shawn
Why would a lender renegotiate? Let's look at this objectively shall we.
You are Lender One and you have a client that has racked up over 20K in credit debt. Now, this person has fallen on hard times and can't pay his debt. You are sending letters saying "give me my money" but still, nothing happens. Now you have to wonder, "Am I going to lose my 20K if this guy files for BK or are they going to pay?"
If CCCS calls Lender One up one day and says "hey, Mr. Smith owes you 20K but can't pay it right now, but if you lower your interest rate to say 0-1% they will be able to pay it and you'll get your money back." Now, Lender One goes, "hell, if I don't do this I'll never get my money back." So he agrees.
That is how the process works. It might reflect negatively on your credit report for the time you are in counseling but once you are done your credit standing will be much, much better because most if not all of your debt is paid off. The lender would much rather work through an organization such as CCCS than have someone file BK. Cause if they do that, more than likely they won't get any of their money back.
Thats why a lender would work with you on that stuff. They at least want to get their money back.
Cheers