What is Credit Counseling?
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Introduction
In this article I will be writing about the credit counseling. It is a process offering education to consumers about how to avoid incurring debts that cannot be repaid. This process is actually more debt counseling than a function of credit education. Please post your comments after reading this article. You can subscribe to our future articles here.
What is Credit Counseling?
The best credit counseling can help people who are behind on their debts get back on their feet. Credit counseling often involves negotiating with creditors to establish a debt management plan (DMP) for a consumer. A DMP may help the debtor repay his or her debt by working out a repayment plan with the creditor.
Who needs credit counseling?
Typically, counseling services negotiate lower payments with credit-card companies and other lenders, then make the payments using a check or electronic funds transfer sent to them by the consumer each month.
Most of the counseling services’ fees are paid by the lenders themselves, which send back to the services a portion of the payments received. This has led some critics to charge that credit counseling is just a tool of the lending industry.
The payment system, known as “fair share,” has certainly encouraged the growth of credit counseling services. And some agencies, driven by competition, are now openly courting consumers who haven’t fallen behind on their debts by promising lower interest rates. This development has angered credit-card companies and often hurts consumers, who may find out too late that such plans can hurt their credit ratings and are often unnecessary.
Summary
In this article I have written about the credit counseling and who needs the credit counseling. This process is most common in the countries like USA and UK. Please post your comments in the comments section. Thank you for reading this article!!!
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