Consumer Credit Counseling

Very often, consumers who are beginning to flounder financially and need help, have reached out to professional credit counselors for assistance in straightening out their finances and for help in improving their personal credit scores. There are also free consumer credit counseling services that may better suit your circumstances.

Interest rates on financed loans and credit card debt can become onerous and when you add in penalties and late fees, some people find themselves against the wall. Making minimum payments can get you deeper into debt and the only way to get the help you need is to seek out a reputable consumer credit counselor. They find themselves asking for help because they did not fully understand the system. An experienced consumer credit advisor can save you money and reduce your debt.

I am not going to make excuses for anyone getting into debt over his or her head, but I think it is fair to say that it would be practically impossible for anyone to compete in today's arena without the aid of a credit card. And that's where most folks get into trouble. Credit cards make it extremely easy for anyone to be an instant "big spender". Once you have your credit card, or line of credit with a bank, as long as you stay within your credit limit you can easily shop for big ticket items that you would otherwise have to pay for in cash.

You start out buying something small; maybe shoes or clothing, a couple of books, and the week's groceries. When you get the bill at the end of the month it is a couple hundred dollars. Hmm. But wait, what's that at the bottom of the statement? I only have to pay a minimum payment of $15.00? Not the $200.00 or $300.00 total? Boy, what a deal! I got my new clothes and fed the family for only $15.00. Wow! So you try it again; and the next month. Pretty soon you are up to a thousand dollars or more and you are only paying the minimum.

You saw that you only had to pay the minimum payment each month, but did you notice that you are now paying about 19.5% interest on the money your borrowed? A single credit card can charge an APR (annual percentage rate) of 15% to 20% on your unpaid balance. Did you take a look at the late fees? You can find them in the small print on the back of the statement. Try $25.00 to $40.00 for a late payment and possibly additional interest on your balance. If you don't take a hatchet to your credit card at this point, it could be all downhill from here. And it just seems to gets worse, never better.

If you do find yourself in a predicament like this you need professional help then you should really think of seeing a credit counselor or credit counseling service. Of course you can contact your creditors and try to work out some settlement to ease the burden of high monthly payments and fees. It is quite possible that you will be successful, for a time, but they will never let you off the hook. Usually, you can expect lower payment at higher interest rates and no relief from your debt. With lower payments and higher rates all around, you will never pay it off.

Borrowing more money to pay off your existing debt is a possibility and may also help with lower payments at a reduced interest rate. Depending on the amount it may require borrowing against equity such as your home. A credit counselor can offer you a range of plans and options to help you make the proper decision that is best for you.

A good credit counselor will know the ropes and have a few tips or tricks you would never know about that could enable him to not only negotiate reduced monthly payments and interest rates, but also reduce or have forgiven, a portion of your total debt.

Two areas where your professional credit counselor or counseling service can help you the most are in personal credit risk management and credit solutions to your particular problem. Once you have made your decision they will work with you and your creditor(s) to lower your interest rate, to reduce the amount of your total payments, and help strengthen your resolve to staying on a straight and narrow credit path.

That is the good news. But the bad news is that you could no longer have a line of credit and the settlement will be recorded on your personal credit history. You will have a devil of a time borrowing any more money. This is one of the advantages of having a professional credit counselor. He may be able to not only negotiate a better deal with your creditor(s); he may also be able to minimize the way the newly structured settlement is recorded so that your credit rating will not be severely impacted. He will also work with you to help you to improve your credit rating.

If at any time, you find yourself falling behind in your credit payments and feel that your repayment schedule is dictating your every action and is making a sea change in your lifestyle you should definitely make plans to visit a professional credit counseling service. They will know best how to advise you and how to get you back on the right track. They have a range of solutions and options that can help to lift you up out of the credit hole you have dug for yourself.

Take heart. There is an option that will fit your circumstance, too.

Jack Igan is a part-time writer and webmaster at http://www.bestcreditscoring.com. This website can help you to get better credit and to straighten out an already shaky credit report.