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Credit Counseling: Is It For You?

As with anything else in life, it's nice to have someone guide us through the rough spots. Essentially, that's what credit counseling is. So what are its benefits? Should you try to just go it alone or seek outside aid?

Answer: If you're reading this, it's likely you already believe you may need some solid credit counseling for debt help. Keep in mind that asking for help is a very positive thing. It means you're ready to affect a change for the better. Here's what credit counseling can provide for you.

Credit Counselors: How They Can Help

Unsecured Credit
Credit counselors will work with both you and your lenders for an equitable resolution. Lenders, in general, are willing to do this because they see it as a necessity (better to receive some of their owed money back in a timely fashion than none at all). However, this refers to unsecured credit only, such as credit card debt.

Secured Credit
Mortgage and car payments are secured, which requires you to work with those lenders directly. Credit counselors cannot resolve issues that involve secured credit.

Credit Counseling and Credit Reports
There's no need to put off credit counseling for fear of how it may appear in future reports. Quite the contrary, you should feel free to seek the help you need. This can help avoid a bankruptcy (and you don't want that showing up).

Alternatives to Credit Counseling

Home Equity
Credit counseling can be a long process, but a home equity loan can help you avoid this altogether, quickly reducing your debt burden. Apply for one to consolidate high-interest debts, bills, and credit cards. High-interest debt can be one of the main culprits in financial difficulty — something that's too often ignored by many.

Imagine the following scenario:

  • You're carrying a balance over $5,000
  • You only make the minimum payments
  • Everything is fine since "your bills are paid"

True. But you're likely paying as much as $1,000 a year in interest alone — not to mention the cash being drained from other debts you may have.

How will a home equity loan help? You can immediately lower this amount by $600 annually. This allows you to either pay off your debt much faster, or free up cash for other needs. (And who doesn't want that?)

Click here to compare home equity loan rates and see how much you can save

Debt Management: It's Your Responsibility

The more time stuck in high-interest debt, the more money you're wasting. A home equity loan can be the problem-solver you've been looking for. The important thing is to act. Like most things in life, the person to rely on most for improving your financial situation is you.

Even with credit counseling, you retain total control of how your debts are paid, as well as when. If you choose to do this, be aware that since there is no signed commitment required on your part, the agency must leave the repayment of your debt in your hands.

Follow their advice! Otherwise you may find yourself exactly where you started — overwhelmed with debt. Credit counseling, as with any other type of advice, only works if you follow it.

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