Important Questions to Ask a Credit Counseling Service

Working with a credit counseling service can mean the difference between totally wrecking your credit score by making late payments and missing payments, and staying on track with your finances every month.  To make the best use of your time with a trained counselor at the credit counseling service you use, it’s important to both have certain financial information handy and to ask the right questions.  You’ll want a written list of your monthly income for the last few months, as well as detailed accounts of your spending habits, including debt payments.  Additionally, you will definitely want answers from the credit counseling service on the following questions.

 

First, ask the counselor to list all of your options for repaying your debts.  Any respectable credit counseling service should do this as a rule, but you’d be surprised how many do not.  The reasons vary, but a lot of counselors are taught to push the most profitable services their companies offer, to the exclusion of even talking about other possibilities.  It’s a hurdle you must get around by pointedly asking the credit counseling service provider for a complete list of options.  The second most important question to ask the credit counseling service is how much each of their services costs, if you ultimately decide to hire them for debt management, debt consolidation or a home equity loan.  Get specific answers in writing.

 

Keeping in mind that one of your goals in seeking out the advice of a credit counseling service is to save or start repairing your credit history, be sure to ask your counselor to detail the repercussions of choosing each form of debt repayment plan available.  For example, ask whether entering into a formal debt management plan with a company is likely to hurt your credit history more, less or about the same as taking out a home equity loan.  The idea is to not only get a picture of how to pay your monthly debts now, but which specific form of repayment the credit counseling service recommends for doing the least possible damage to your credit score and history.  Remember;  negative credit issues can remain on your credit history for up to 7 years (bankruptcy for up to 10 years)

 

Finally, the counselor you talk with at any reputable credit counseling service should be able to help you calculate how long it will take to repay your debts under various scenarios, but you may have to ask.  It can be an eye-opening discovery.  Depending on how high the interest rate is on a debt that you’re repaying, making just a bit more than the minimum payments every month can literally shave years and hundreds or thousands of dollars off the total you end up paying.

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