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What Does a Credit Counseling Job Entail?

Credit counseling has become the catch phrase of the nation. At a time when a large percentage of the population is saddled with debt, the services that credit counselors provide have caught the attention of the nation, and most people are turning to them to solve their credit problems

So what does a credit counseling job entail? You basically have to go over to one of these companies and tell your problems, and they’ll advice you on how to stop incurring further debts, and how you can pay off your existing ones. This process can be actually be put under ‘debt counseling’ rather than a part of credit education.

Credit counselors often negotiate with your creditors and draw up a debt management plan. In a debt management plan, both your creditors and your credit counselor will have a look at all your debts and your projected income. The credit counselors will then attempt to reduce your interest rate, based on the fact that there will be a higher chance that you will pay back your creditors because of the more reasonable monthly payments. The result will be that your monthly payments will reduce, and you’ll also be able to fully settle your account, thereby minimizing the damage done to your credit rating.

The big advantage of obtaining the services of a credit counselor is that all your monthly payments will be consolidated into one single payment, thereby reducing the headache created by trying to manage a lot of payments within days of each other. Moreover the payments will be smaller than the total of payments made previously because credit card banks tend to be more willing to accept a lower payment from a person in a debt management program rather than a person who is trying to settle the account on his own. Though credit counselors, in their ads, claim to cut payments by nearly 50%, it is more common for a 10% - 20% reduction to be obtained.

The biggest benefit of credit counseling must be the fact that people are can get relief from their debts in about 3 – 5 years, which is a much better prospect considering the fact that it may have taken more than 10 years if the person decided to settle the account on his own. This is done by the credit counselor negotiating a lower rate of interest.

However, be wary of who you select as your credit counselor. Due to the burst in the number of people in debt in recent times, many credit counselors have sprouted up making totally absurd claims such as ‘we reduce your debt in 1 year’! Often, they take your money and just disappear, leaving you deeper in debt than you previously were.

Credit counseling is a great way of obtaining debt relief, but make sure that you don’t fall into your old habits just because you have more money in hand!

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