Credit Counselling Companies
If you are steeped in paying off loans and other credit products and are finding it difficult to manage your
regular expenses and servicing your debts simultaneously, it is time you sought professional help, especially if
you are not capable or confident of handling the matter yourself.
Credit counselling companies provide guidance and support on the various methods by which you
can manage your debt in an affordable and reasonable manner. A credit counselling company will allocate a personal
counsellor who will assist in consolidating all your debts and work out a fixed payment plan wherein you can make
reasonable monthly payments to reduce your debt.
Before choosing a credit counselling company to help you, make sure that you check the history and record of the
company and its performance, feedback from the market and any former or current clients who've used the services of
the credit counselling company.
Some credit counselling companies will provide their services for free while others will charge a fee which will
be included in the monthly payment you will make to the credit counselling company which is making payments to
creditors on your behalf.
What credit counselling companies do
Credit counselling companies will contact all creditors on your behalf and negotiate new payment terms where the
debt outstanding is restructured with a new payment plan with modest instalments and reduced interest rates. It is
important that all your creditors agree to the new payment plan suggested by your credit counselling company and
that you faithfully adhere to making the necessary payments.
The credit counselling company and/or your creditors are obliged to update records in your credit file that you
are currently undergoing credit counseling with and the duration for which the new payment programme is valid.
During this period - an average credit counselling plan runs for a period of 5-6 years - it could be possible that
you will not be able to secure fresh financing. The advantage of registering with a credit counselling company is
that you will be able to stabilize your credit rating by ensuring prompt and regular payments and pay off all debts
outstanding in a fixed amount of time. Your credit rating is restored to normal at the end of this period and you
can begin to apply for further credit should you wish to do so. Credit counselling companies are staffed with
counsellors who have professional expertise in dealing and coming to suitable agreements with creditors. Reputed
and sound credit counselling companies are also welcomed by creditors since the former help in clearing off debts
which the creditors might have to spend more to collect on and eventually write-off without any recovery prospects.
Not complying with the terms secured by your credit counselling company or changing companies providing you with
counselling during the period the debt management plan is in place, could lead to a nullification of the payment
plan and your credit file will revert to its former adverse status. A disadvantage to working with a credit counselling company as opposed to doing it on your own is that
they charge substantial fees which is part of the monthly payments you would make. If you're already staggering
under the huge burden of debts, this additional expenditure is only going to make it worse.
Therefore, it is important to think carefully and understand that you can afford the additional expense; else it
makes a lot of sense to either approach creditors on your own, or utilize the services of a credit
counselling company offering free assistance.
Credit in Minutes Tip #1
Stay on top of your credit report. Most credit reports contain errors. Make sure you check your credit report
every year (you get one free credit report every twelve months) and if there are errors make sure to challenge them
with the reporting credit agency. Credit agencies are required to investigate each and every challenge that gets
Credit in Minutes Tip
Just because you qualify for all of those credit cards does not mean you should get them. A person with too many
credit cards looks sketchy in the eyes of a potential creditor. Think of it this way: if a person is financially
stable does he or she need ten different credit cards? Wouldn’t just one or two suffice?
Credit in Minutes Tip
The best way to raise your credit score is to make all of your payments on time. It sounds too simple to be
true, but that’s all there really is to it. Staying out of debt and/or making all of your debt payments on time
will keep your score up where it should be.