Lenders View Credit Counseling as High Credit Risk
Participating in a credit counseling program will not affect your credit score; however, the words "Managed by Credit Counseling Company" will appear under each account on your credit report that is involved in Debt Management Program. A DMP involves the credit counseling agency negotiating lower interest rates or reduced repayment amounts with your lenders. Lenders usually equate participation in credit counseling with "High Credit Risk", which can negatively impact your ability to get financing. In fact, some Debt Management Programs prohibit you from even taking on any credit.
Missing a Payment or Settling for Less is Always Derogatory
Although credit counseling does not directly impact your credit scores, if you or the credit counseling service does not make monthly payments on time as agreed, creditors will report this to the credit bureaus, and the late payment notations on your credit report will significantly lower your credit score. Plus, even if you make all your payments on time, the creditor will most likely report the account as settled, meaning paid for less than originally agreed. When you settle a debt for less than originally agreed, there will almost always be a negative impact on your credit scores, whether you negotiate directly with your lenders or a credit counseling agency does so on your behalf.
When a credit counseling organization suggests you enroll in budgeting and financial management education, these classes will not appear on your credit report.
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Mortgages
- Mortgage eligibility
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Insurance
- Insurance premiums
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Employment
Interest Rates
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How to Read a Credit Report
- What is a Credit Report?
- The History of Credit Reports
- What Makes Up a Credit Report?
- Credit Reporting Agencies
- How Do Items Get Reported?
- How Long Are Items Reported?
- Serious Errors in Credit Reporting
- Which Inquiries Hurt and How Do They Get on My Credit Report?
- Prescreened Credit Offers
Obtaining Your Credit Report
- Your Right to a Free Credit Report
- How to Obtain Your Free Credit Report
Mechanics of Credit Scoring
Members Only
- Why Credit Scores?
- Who is FICO?
- Fair Issac Corporation Speaks Out
- Credit Card Debt Affects Score
- How Do Inquiries Affect Score?
- Different Types of Scores
- What is a Good Credit Score?
Obtaining Your Credit Score
- Online Vantage Scores Are Insignificant
- Types of Scores That Matter
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Credit Management Principles
- How Many Trade Lines Should You Have
- Recentness of Account Activity
- Length of Payment History
- Managing Revolving Debt - Credit Cards & Lines of Credit
- Late Payments – What You Need to Know
- How Inquiries Affect Your Score
- Paying Collections or Defaulted Accounts
- Your Debt-to-Income Ratio (DTI) Impacts Loan Approval
Credit Restoration
- What is Credit Restoration?
- How Credit Restoration Works
- Consumer Dispute Statements
- About Judgments & Tax Liens and Restoring Your Credit
- Comparing Credit Repair Companies
- Rapid Rescoring Can Be A Quick Fix
- Fair Credit Reporting Act (FCRA)
- Fair & Accurate Credit Transactions Act (FACTA)
- Credit Repair Organizations Act (CROA)
Establishing Positive Credit
- Why Establish New Accounts?
- How to Establish New Accounts
- Active vs. Closed Accounts
- When Not to Apply For Credit
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Debt Validation
Members Only
- The Debt Validation Process
- Prove a Debt Collector is in Violation and Win $1000
- Do's & Don'ts of DV
- Pro's & Con's of DV
- Sample Letters
Debt Settlement
Members Only
- Hiring a Debt Settlement Company - The Fees
- Hiring a Debt Settlement Company - The Risks
- The Debt Settlement Process
- Pro's and Con's
- Do's and Don'ts
- What is Your Best Option?
- Sample Letters
Credit Counseling
Members Only
- How Credit Counseling Works
- Why Most Plans are Bad
- Warning Signs - Tips for Consumers
- When its Appropriate to Utilize Credit Counseling
- How Does Credit Counseling Compare to Chapter 13 Bankruptcy?
- Impact on Credit Scores and Financing Approval
About Chapter 7 Bankruptcy
- What it is
- How it works - rules
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- Should you file for bankruptcy?
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About Chapter 13 Bankruptcy
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Collection
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- How they affect mortgage financing
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Charge-Off & Profit/Loss
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- Affect on mortgage financing
- Paying charge offs - do's & don't
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Judgment
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- Garnishments
- Satisfaction - payoff recordings
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Tax Lien
- What it is
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- Satisfying/release - get & keep your proof
Child Support
- What it is it?
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Foreclosure
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- Impact on credit
- Stopping foreclosure
- Deficiency judgments
- Sample letters
Repossession
- What it is
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- Impact on credit
- Deficiency judgments
