Credit counseling agencies are businesses that educate the public about how they can take control of their finances and handle current and future debts in a responsible manner. If your poor payment history has resulted in charge-offs and the inability to secure any new credit cards, consulting with a counselor may help you overcome your negative credit rating.
The Initial Consultation
Many consumers choose to speak to a credit counselor if they have incurred a lot of debt that is interfering with their livelihood or if they are having difficulty being approved for a loan or a line of credit, due to a poor credit score.
You may have decided to ignore collection notices and now attempt to pay for all of your current purchases with cash. This method is not necessarily wrong, but it could be problematic if you ever encounter a situation in which you need to take out a loan and are unable to do so, due to your poor payment history.
Your initial consultation will involve speaking about your current financial status and any recurring bills that you are responsible for paying. A review of your credit report will determine how many open accounts you have and any amounts that are in arrears.
If many years have passed, since you last used a credit card, these negative marks on your report may not be present any longer. In spite of this, the fact that you did not pay your debts off and now have no open lines of credit has probably resulted in your credit score being very low.
A credit counselor will discuss debt consolidation programs if you have several creditors that you have been attempting to pay. They may also suggest ways to reestablish your credit, such as applying for a prepaid credit card.
A Debt Management Plan
People who owe a lot of creditors and are having difficulty budgeting their money each month may be advised to sign up for a debt management plan. Although a credit counseling session will likely not cost you any money, enrolling in a debt management plan will require you to pay a nominal fee.
This type of plan is regulated by the federal government and the state that you reside in. A debt management plan can assist you with catching up on past due bills, budgeting money for future payments, and saving money for a large expense. If you need credit counseling, reach out to a professional in your area.