When Should You Consider Credit Counseling & What Should You Expect

If you are able to pay your bills, and you are current on all your accounts using the income you make every month, you probably do not need credit counseling. Here are some signs that you should start contacting credit card counseling services sooner rather than later.

If you:

• Can't pay your credit card bills
• Can only make payments by covering household costs on your credit cards
• Are consistently paying one or more bills late, incurring fees and penalties.
• Wish you could negotiate a better interest rate.
• Foresee that your payments will soon become unsustainable due to a change in your mortgage interest rate, illness or an anticipated lapse in employment.
  

If these things are true, then you should start contacing services who can help you manage your debt. They can work with you to see which of many solutions will work best for you and your creditors.

Note that as you research counseling services, you should make sure the following is true.

• You should not have to pay big upfront fees
• The service you work with should be accredited by the National Foundation for Credit Counseling or Association of Independent Consumer Credit Counseling Agencies
• Every payment you make to a credit counseling firm should result in payments being made to your credit cards. Some credit counseling services take your money and do not pay your debts.

Credit counseling may have some effect on your credit, or it may have none at all. Some lenders may not want to do business with you after you've completed your plan, but others will. Contrast that with a bankruptcy, which is viewed by almost all mainstream lenders as a huge negative on your credit report. These lenders, who prefer to deal with consumers with good credit, typically won't do business with you for the 10 years the bankruptcy remains on your file.