There are two types of credit counselors. Those that deal with credit repair, and those that are experts in debt management. While both types of services will ultimately impact your credit rating, these specialists offer services that differ quite a bit from each other.
The biggest difference that most people will be able to observe is one of timing. Credit management counselors give you the professional guidance and advice you need to get your credit problems under control. The ultimate objective is not only to get you out of debt, but to also keep you free from it. In other words, you talk to these professionals before your credit problems overtake you and make your life a living hell.
Once you have found yourself in a hole financially and can’t seem to dig yourself out, at this stage of the game, your best bet is to talk with a credit repair counselor. These counselors offer a very different range of services. These services all have something to do with you reconfiguring your debt so you can be in a position to eventually pay them off. In short, the big difference between a credit repair counselor and a credit management counselor is timing. The latter helps you before you get in way over your head and the former helps you when you’re already sinking deep into financial quicksand. Here are some quick guidelines to know when you need the services of these specialists.
Signs that you might need the help of a credit counselor specializing in credit management
If you notice that an increasing percentage of your income just goes to pay off your credit card bills, it might be time to give some serious thought to seeing a credit management professional. Yes we do need to spend money on our daily needs. But if we are to really look into the numbers, the things we need for survival is really not that much.
If you notice that you are only paying the minimum amount due on your cards but you have less and less money left for the rent, utilities, gas, and food, you might want to get a hold of a credit management specialist before it’s too late. This type of counselor helps you prioritize your spending and can put you on a program that enables you to seriously chip away at your fast-rising mountain of credit card debt. That’s the reason why people hire them. They make their clients accountable for their own financial mismanagements.
Signs that you might need a credit repair counselor
The point of no return for people facing credit card debt issues is when they fall behind payments one too many times. At this stage, penalties kick in. And they start receiving letters and notices that are formatted to look “friendly” but threatening.
Pay attention to these signs: you can’t cover your monthly minimum, you have gotten warning letters in the mail, or you have gotten collection agency notices. Your seemingly unsolvable credit card debt issues become truly impossible. You start thinking about radical ways to solve your money problems.
What is one of the worst signs you need a credit repair counselor? If you were to use the bulk of your pay to repay your credit card debts, it wouldn’t make much of an impact. This is the worst sign of all. At this stage, your credit score has taken a hit. At this stage, you are no longer qualified for new debt at the old easier rates and terms. That is provided, lenders are willing to lend you in the first place. At this stage, you need to speak to a professional credit repair counselor who can help you get out from under your mountain of debt. This specialist will help you restructure your debt payments so they are easier on your pocketbook. Sure, the term got extended, but at least you have salvaged your credit score by reforming the terms of your debt payback.
Keep the difference above in mind. Your choice between the two types of credit counselors depend on where you are in your financial timeline. Surely you don’t want to hire someone whose expertise is one that does not fit into your situation. The irony is that their job titles can confuse people who are already desperate and not in a clear frame of mind.