Credit Counseling | HotPads

Credit Counseling

If you've checked your credit report and don't like what you see, or if want to buy a home and can't seem to get out from under your existing debt, then you may want to consider the services of a credit counselor. Learn the basics of credit counseling from HotPads.

Credit Counseling

    What Credit Counselors Do
    Credit counseling organizations work for you to help you better manage your finances, in most cases after you've gotten in a little over your head with debt. They can help you come up with a monthly budget and possibly work with your creditors to devise a debt management plan that allow you to better pay your bills with your existing income. Many offer free educational resources and workshops.

    A typical first will involve a counselor asking you questions about your finances, determining how much you spend each month of necessities like rent vs. discrentionary things like entertainment, then create an action plan to help improve your financial health.

    Debt Management Plans
    For individuals with extreme debt burdens who are unable to dig out from under with a simple budget, a debt managment plan may be the answer.

    With a debt management plan, an individual deposits money with a credit counseling organization each month and the organization uses that money to pay bills in accordance with a schedule negotiated with the creditor. Credit card companies, student lenders and other firms often agree to your interest rates and fees in the hopes of being repaid in a timely manner. These payments are spread out over a series of several years.

    Note that with most debt management plans, borrowers are told to refrain from applying for any new credit until their existing bills are paid.

    Choosing a Credit Counselor
    As with any type of business, there are reputible and disreputable credit counseling organizations. Many credit counselors are nonprofits, and this is one indicator that the organization is a reliable one.

    You can get tips for choosing a counselor from the Federal Trade Commission.

    Checking your credit score
    It's a good idea to do a personal review of your finances, credit and debt before talking to a credit counselor. You can check your credit score online at

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    Home Buyers Guide
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    Moving & Storage

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