Credit-Counseling Pitfalls
Having good credit can be a bad thing. Based on your good name, everybody offers to lend you money because they figure you can pay it back. For any number of reasons, you can wind up in debt up to your eyeballs. What to do then? Ask for help. However, even your “helpers” can put you in a worse situation. There are good helpers and bad helpers — if you get involved with a bad one, it can be devastating to your finances, not to mention your credit.
Downtown Scammerville
The credit-counseling world is full of shady actors. It makes sense if you think about it: people who are down on their luck are easier to swindle. Likewise, when you are desperate, you are grasping for a handhold and will grab onto anything that seems to have potential.
Some debt-counseling organizations are legitimate and helpful. However, some are worthless, and others are criminal. If you wind up with a bad apple, your situation will go from bad to worse. In the most extreme cases, debt counselors will pocket your payments that are supposed to go to your creditors. In other cases, they actually forward the money to the creditor, but they make late payments. Finally, some of these companies charge hefty fees and provide very little value.
Avoiding the Worst Ones
If you decide to seek help, find a reputable counselor. Shop around and see what type of feeling you get from various counselors. If they pressure you with a debt-management plan where you pay through them, keep shopping. A great first step is the National Foundation for Credit Counseling (
Watch out for impostors. There are a lot of organizations with names very similar to Consumer Credit Counseling Services. Coincidence? Not likely. These organizations are trying to snatch distressed borrowers. If you are confused about whom you're dealing with, start with the National Foundation for Credit Counseling and ask for a local counselor.
How do you know if you are dealing with a rotten apple? Look for some common tipoffs in the form of bogus claims.
We Remove All Negative Items
It is not possible to remove items from your credit report if they are true. The best thing you can do is make them less negative.
Eliminate Debt via Obscure Laws
Yes, your debt is a legal obligation, and you are supposed to pay it back. Some debt-elimination companies try to “educate” you on laws that would invalidate your debts.
Pennies on the Dollar — and No Credit Damage
If you settle for less than you owe, it will affect your credit. It may be a viable option, but you will have to deal with it for the next seven years.
