Hidden risks of consumer credit counseling
Impact on credit: Enrollment in a debt management plan may be noted on your credit report, negatively impacting your score and borrowing ability. Upfront and monthly fees: Even nonprofit agencies may charge fees that add to your financial burden.
The short answer is yes, credit card debt forgiveness can negatively affect your credit score. However, the impact depends on various factors, including your current credit score and the specifics of your debt settlement agreement.
CreditAssociates is a legitimate, professionally accredited company that has helped many clients settle debts. It develops a customized plan for each client and charges no upfront fees — you only pay once your debt is resolved. You can get started by setting up a free consultation to go over your debt situation.
Consolidating debts may temporarily reduce your credit score, but your score will improve over time as long as you make payments on schedule. You can minimize the impact on your credit through strategies like keeping credit lines open and avoiding new debts.
Yes, you can technically continue using your credit cards after debt consolidation as long as you keep the accounts open during the process. That said, whether you still have access to your credit card accounts post-consolidation may depend on a few different factors.
Debt consolidation can be a useful financial tool for anyone with multiple debts. It can help you simplify your finances and reduce your interest costs and monthly payments.
No upfront fees - you don't pay a thing until we settle your accounts. You work with a dedicated Client Success team who is with you every step of the way. With just one phone call we can share free information on how to drastically reduce your credit card debt in as little as 24-36 months.
The bottom line. The journey from debt settlement to homeownership is typically a matter of years rather than months. While the exact timeline can vary based on numerous factors, most individuals should expect to wait at least 2-3 years, with 4-7 years being more common for conventional loans.
It could cause long-term damage to your credit
Debt forgiveness programs almost always come with a significant impact on your credit score. When you stop making payments to your creditors while the settlement process is ongoing, your accounts will become delinquent, which will be reported to credit bureaus.
Simply talking to a counselor about your financial situation during a credit counseling session will not affect your credit rating. Your counseling session should be free, confidential, and it should help you determine the implications of your current financial situation and what resources and options are available.
These methods won't crush your credit score: Consolidation loans from a bank, credit union, or online debt consolidation lender. Balance transfer(s) to a new low- or zero-rate credit card. Borrowing from a qualified retirement account, such as an IRA or 401(k).
Duration on your report: Debt settlement can stay on your report for up to seven years. Debt settlement occurs when a company contacts creditors and negotiates a settlement on your behalf. The debt settlement company may ask you to stop paying your creditors and instead pay an amount into a separate account.
The first danger of debt consolidation is that these companies are in business to make money. Many individuals in debt will rush into debt consolidation without understanding the full terms of their repayment. Some companies will offer “teaser rates” or tack on additional fees for transferring funds.
Answer and Explanation: No, debt consolidation doesn't affect buying a car. When a company utilizes its earnings in making purchases for a car, there is no relationship with the outstanding debts in the company.
National Debt Relief is a legitimate company providing debt relief services. The company was founded in 2009 and is a member of the American Association for Debt Resolution (AADR). It's certified by the International Association of Professional Debt Arbitrators (IAPDA), and is accredited by the BBB.
When it comes to credit card debt relief, it's important to dispel a common misconception: There are no government-sponsored programs specifically designed to eliminate credit card debt. So, you should be wary of any offers claiming to represent such government initiatives, as they may be misleading or fraudulent.
The impact of a debt settlement will remain on a credit report for seven years, which can make it hard to obtain new credit or loans at favorable terms during that time. However, by demonstrating positive financial behaviors, like paying bills on time and reducing debt, your credit score will improve over time.