Find Credit Counseling and Debt Management Solutions For All Credit Ratings Credit Counseling, Credit Repair, and Debt Management What counseling can do to your credit Here's another controversial topic. You may have heard that credit counseling will trash your credit report or even that it's "worse than bankruptcy." Neither is really true. Credit counseling may have some effect on your credit, or it may have none at all. Some lenders may not want to do business with you after you've completed your plan, but others will. Contrast that with a bankruptcy, which is viewed by almost all mainstream lenders as a huge negative on your credit report. These lenders, who prefer to deal with consumers with good credit, typically won't do business with you for the 10 years the bankruptcy remains on your file. What happens to your credit during counseling largely depends on how your lenders report your account to the credit bureaus. First USA, the credit-card giant, reports its customers as delinquent on their bills until they make three consecutive payments of the new minimums negotiated by their credit services, said spokesman David Webster. Citibank, by contrast, simply adds a note to the credit bureaus' files that the customer is enrolled in credit counseling. Being reported as late or delinquent can certainly hurt your credit score, the three-digit number widely used by lenders to determine creditworthiness. A simple notation about credit counseling probably won't. The credit score formula used by most lenders, known as FICO, now ignores any reference to credit counseling that may be in your file, said Craig Watts, spokesman for FICO creator Fair Isaac & Co. What to watch out for Once you've decided you want credit counseling, you should investigate the company or service carefully before signing up. Red flags to avoid include: * Big upfront fees. Consumer Credit Counseling Services typically charge a $10 set-up fee. If you're paying a lot more, you may be the one who's getting set up, unless you're getting extensive and personal money coaching that could justify the fee. * No accreditation. Legitimate credit counseling firms are affiliated with the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies. * Delayed or missing payments. Some companies pocket your first months' payments as a fee, rather than passing the money on to your creditors. Missing payments can hurt your credit rating. Find out how much of each monthly payment is going to your creditors, and when it will be sent to them. * Unrealistic promises. Some companies falsely promise that you can settle your debts for little or no money, without hurting your credit rating. Legitimate credit counseling services help you pay back what you owe, albeit at lower interest rates, and acknowledge there may be some affect on your credit rating and ability to obtain new credit. The following link can help you find certified credit counseling agencies: http://www.justice.gov/ust/eo/bapcpa/ccde/cc_approved.htm Privacy Policy Credit Counseling and RepairSecured CreditBad CreditGood CreditStudent CreditOnline Banking *See the online application for details about terms and conditions for these offers. Every reasonable effort has been made to maintain accurate information. However all credit card information is presented without warranty. After you click on the offer you desire you will be directed to the credit card issuer's web site where you can review the terms and conditions for your selected offer.