Home Buying

Credit Is the Most Important Part of Buying

Signs You Need Credit Counseling by Piper Nichole

What are the signs you need counseling? Are you not able to pay your bills on time? Are you missing payments? Do you borrow from household living expenses to pay for credit accounts and vice versa? Are you borrowing on credit to pay credit or borrowing from family and friends to support your budget? Are you receiving collection calls and letters that are causing you to avoid the phone? Are you making financial promises you cannot keep? If you are doing any of these things, you may need help. But, as experts point out, anything a credit repair clinic can do, you can do for free!

How does credit counseling work?

The counselor assesses your financial status. Based on the counseling, they share options you have ranging from simple instructions on how to do it yourself (budgeting) to offering debt management (intervention) to education programs on credit and even referral to legal assistance.

Keep in mind, if there is anything incorrect on your credit report, you can dispute it. Make sure someone else's information doesn't appear on your report (it does happen). Make sure anything on your report meets the timeline requirements of the Fair Credit Reporting Act (FCRA) — you can generally dispute anything that antedates the current report by seven years. However, there are exceptions, such as tax liens, bankruptcies, and judgments. Make sure the trade lines are yours by checking the account numbers.

Table 3.1 How Poor Credit Affects You

Spotty pay history	2–5 years adverse information on credit reports
Charge-off	7 years adverse information
Judgments	10 years or more, depending on whether the account has a remaining balance
Bankruptcy	7–10 years, depending on chapter filed (See Chapter 4)
Collection accounts	often more than one for a single account
Excess credit	causing a poor debt ratio

Source: Bettye Banks, senior vice president of education for Consumer Credit Counseling Service of Greater Dallas

If you need credit counseling, contact the National Foundation for Credit Counseling at www.nfcc.org or call (800) 388-2227 to talk with a counselor near you. National Foundation for Credit Counseling is the nation's largest and longest servicing national nonprofit counseling network.

<emphasis>Avoiding Credit Repair Scams</emphasis> <p>If a credit repair clinic requires payment before the promised service, experts say to refer them to the Credit Repair Organizations Act and the FTC. These companies get you by requiring you to pay for another service first, like reading and explaining your credit report (CCCS agencies do this very cost effectively) or having you sign up for a credit monitoring program (shop for the best deal). 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