Question by jimthephilosopher: How badly will using debt counseling/credit card counseling hurt my credit?
I am thinking about consolidating a lot of unsecured debt using a debt/credit card counseling service. How will use of that sort of service affect my credit rating long-term?
Best answer:
Answer by Meg D
Debt counseling will hurt your credit within 3 months. It can drop your credit score by 50 points. The best way to consolidate debts is through a second mortgage or a home equity line of credit.
Self debt management is the best way, but if it doesn’t work, you can seek counseling help. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But be aware that, just because an organization says it’s “nonprofit,” there’s no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, which may be hidden, or urge consumers to make “voluntary” contributions that can cause more debt.
Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
But be careful with some credit counseling scams on the internet.
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