Is a Consumer Credit Counseling Right For You?

Your credit history will determine your credit worthiness and the interest rate you will pay when you apply for credit. That’s why it is important to maintain good credit with your best effort, but unfortunately sometime it is out of our control and we are forced to live in bad credit situation. As a result, an increasing number of people are getting help from consumer credit counseling agencies to resolve their debt issues. However, consumer credit counseling may not be the best option for everyone. Then, how do you know that getting assistance from consumer credit counseling is right for you?

There are many types of debt relief solutions that you can use to reduce and resolve your debt problem. Among the common one is consumer credit counseling which involve financial education offered mostly by non-profit organizations to get people out of debt. Beside the advices and education courses on money management, consumer credit counseling often tight with the aid of a debt repayment plan that requires you to make a monthly deposit to the credit counseling agency, which will then pay off to your creditors according to a payment schedule set by your credit counselor. Overall, it is a good option to approach a consumer credit counseling agency, but it has some limitations that you have to know before your select consumer credit counseling as your debt relief option.

Credit Counseling Limitations

1. No All Debts Are Included

Consumer credit counseling does not deal with all types of debts. There may be some debts that are unable to place into your debt repayment plan, which include:

Secured debts such as mortgages and car loan.
Current bills for utilities.
If your debt problem is caused by those debts above, then credit counseling services can’t really help you.

2. Can’t Help To Reduce Debt Principal

Credit counseling services can’t help you to reduce the amount of debt principal you owe. You need to go for a debt negotiation or debt settlement services if you look for the potential reduction of the amount of your debt principal. What the credit counselor may help are:

Reduce or waive your interest rate agreed by creditors.
Reduce your monthly payment by prolong the debt repayment period so that the amount used to pay your monthly debt is within your financial capability.
3. Can’t Freeze or Protect Your Credit Rating
Consumer credit counselors will not report their client participation in their debt management program to credit bureaus. However, it may be reported by the creditors which will cause negative impacts to your credit report. If you choose to participate into the debt management plan offered by consumer credit counseling, you should maintain your obligation to reduce the negative impacts to your credit report because the creditors may re-age your account and set the status to current in your credit report.


Credit counseling service can provides a solution for debtors to get out of debt, but it may not the best option for everyone. You should understand the limitations of consumer credit counseling before you choose it to be your debt relief solution.

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