A Complete Step-by-Step Guide to the Credit Counseling Process
Consumer credit counseling includes many different types of financial services for those who are having trouble managing their money. If you find yourself in debt and unsure of how to handle it, a credit counselor could be an excellent resource for helping you get your finances back on track. Use this comprehensive guide to learn everything you need to know about consumer credit counseling services – the process, pros and cons, the costs and much more.
- What is Credit Counseling? | History of Consumer Credit Counseling
Consumer credit was a relatively new phenomenon in the first half of the 20th century. Some retailers, including Western Union, oil companies, and department stores, had issued proprietary cards since the 1920s to serve a more mobile consumer as automobiles became common.
- How Does Consumer Credit Counseling Work?
Credit counseling is a viable debt relief strategy for many consumers overwhelmed by debt payments. The Bankruptcy Abuse Prevention and Consumer Protection Act, signed into law by President George W. Bush in 2005, has confirmed the important role of credit counseling in resolving debt.
- Pros of Credit Counseling | Consumer Credit Counseling Benefits
Unlike other debt relief options available to consumers, most credit counseling agencies are non-profit and do not rely on fees paid by consumers as their main source of revenue. For a small monthly fee, typically under $50 according the Association of Independent Credit Counseling Agencies, credit counselors provide a wealth of services that struggling consumers can use to their advantage.
- Cons of Credit Counseling Services
Like other debt relief solutions, credit counseling has its drawbacks, though most are associated with dishonest or unethical credit counseling services. If you are overwhelmed by debt and facing the probability of default on one or more debt agreements, credit counseling can be a viable and successful solution.
- Questions to Ask Potential Credit Counseling Companies
Consumers mired in debt need advice that goes beyond the obvious. A credit counseling service that offers a sound strategy, reasonable fees and immediate action will help an indebted consumer solve their debt problems.
- Consumer Credit Counseling Fees & Costs
For consumers seeking relief from unsecured debts, out-of-pocket fees for credit counseling are lower than most other solutions. Credit counseling requires almost no upfront costs, while other options such as debt settlement, loan consolidation, and bankruptcy can cost thousands of dollars before you see any results.
- Consumer Credit Counseling Tips
One of the unintended results of the recent FTC regulation changes is that many of the television and radio ads now are for credit counseling, even though there are a number of debt relief programs available to consumers.