Consumer credit counseling (CCC) is a form of debt repayment. With CCC 100% of the outstanding principal is paid off at a reduced interest rate. To enter into a credit counseling program, you first visits with a credit counselor. The financial counselor will walk you through a budget analysis and enroll you into a debt management plan. The credit counseling agency then works with your creditors to come up with a payment plan at reduced interest rates.
There are a few drawbacks to credit counseling. First, and most importantly, the payments may prove to be too costly for your budget. In addition you will be in a payoff program for typically 5 years. Finally, the program is not guaranteed if you miss a payment, or are late at any time during the five years. In these situations the creditor may drop you from their program, and debts previously forgiven will come back along with unpaid interest.
Over the life of the program the agency will educate you about the world of consumer credit. This education will include the things you should do as well as the things you should avoid. Following these steps will allow you to build good credit and maintain it in the long run. Healthy credit isn’t difficult to obtain if strategic steps are in place as well as goals to follow and habits to live by. Credit counseling can be used to get your debt to income ratios in line which will allow for higher credit scores, and better future interest rates.
According to Fair Isaac (FICO), participation in a Credit Counseling program is not reported in your FICO Score. Although we do not offer credit counseling programs, we have partnered with several agencies, and will help you determine if this is the right course for you.
Unlike credit counseling, debt settlement will allow you to settle your debt typically for 40-60% of what is owed, and many customers are debt free within 18-24 months. We want to make sure you have all the necessary tools to maintain a strong financial position. We will stay with you every step of the way and provide the same financial education you would obtain as if you were in a CCA DMP.