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Does anybody know if participating in a debt counseling/consolidation program lower your credit scores? I've been told to stay away from them by a mortgage guy yet the debt counselor guy swears to his mother's grave that it won't hurt my credit. The debt counselor dude did show me a website that said it won't hurt my credit, yet the other dude showed me a site that says it will. I have no clue about who to believe. Can anybody help?
LISTEN TO THE MORTGAGE GUY.I KNOW FOR A FACT THAT APPLYING FOR A TON OF CARDS AND HAVING ALOT OF CARDS OPEN DOESNT HELP YOU IF YOU NEED A MORTGAGE OR LOAN.THATS WHAT MY BANK LOAN OFICER SAID
Bro . . serious as a heart attack here . . . If you can suck it up and stay away from the debt counsel dudes . . . STAY AWAY. Here's the deal . . .Your creditors will get off your back but within 6 months, every creditor will show up on your credit report as SLOW PAY which will ultimately lower your score. Also . . .everytime they pull your CR it lowers the score. If you run into a bind and can't pay something one month it won't show up as quick and may never show up. However, Debt counsel will absolutely show up! Good Luck. . . money is the root of all evil.
Thanks for the advice guys. Ditto on "Money is the root of all evil."
MONEY IS DA DEVIL!!
O2
Credit is such a volatile thing. There's so many little things that come into play that it's nearly impossible to explain. The deal with the open cards is this:
Lets say you have 5 credit cards, each with a $20,000 limit. Out of those 5 cards, you only have a balance on 1, and your balance is $500. Even if you paid all your bills on time, your score will still be lower than expected. Heres why. Even though you only have $500 against your cards, at any given time you can go out and charge up $100,000, then file for personal bankruptcy. So it's the fact that you have $100,000 available to you that makes lenders wince in fear. So they want you to close the cards out leaving as little exposure to the lender as possible. After all, they're greedy people and want to make sure the only money you owe to someone is them! As for credit counseling, don't do it. What you need to do is find someone very close to you with impeccable credit, and maybe a home. Have them take out a home equity loan or a low interest rate personal loan for you, with you as the co-signer. (look at www.bankrate.com for low personal loan rates)
If the person on the loan with you is squeamish, you just pay them every month and have them forward the check to the bank.
Caveman is right on the nose. I am a mortgage broker. What I can tell you is that aside from it lowering your score and all that.... It is looked at like a BK by lenders. Meaning, if you wish to buy a new house in a few years your credit grade will be severely altered simply because you participated in the Debt Consolidating program. This is such a scam. They sometimes even solicite from older people, with great credit. They tell them they are going to do them a huge favor by lowering thier monthly payments, even though the people don't need it. This greatly affects thier purchase (refinance) power.
Thank a bunch for the advice guys! I'll tell that credit counselor dude to go screw himself!