Joe Sellars

This brief article will show you some of the facts about credit counseling programs. These are the facts that result in a failure rate of over 80% of the clients enrolled in these programs. People should be aware of these facts before they enroll themselves into a credit counseling program to ensure themselves they are making a smart financial decision.

1. Most of the credit counseling companies are created and funded by the actual credit card companies themselves. They serve as a sort of middle man for the credit card company to collect the debt amount owed.

2. The credit counseling companies work for and represent the credit card companies, they do not work on behalf of the client. The credit card companies dictate to the credit counseling company the minimum payment requirement, and the interest rate. There is no negotiation at all on this.

3. The credit counseling companies can lower the interest rate, however they can never actually lower the principal balance. The average interest rate on one of these programs is around 10% which is more in the middle than actually being very low. By not lowering the principal balance they are not truly a form of debt reduction, this is just an accelerated repayment program.

4. You will end up actually paying more than the original debt amount, due to the monthly fees, interest and lowered monthly payments which greatly extends the amount of time you are going to be in debt.

5. It does have a temporary negative impact on your credit score/report and is made a public record on your credit report, during the duration of the program.

6. Getting a mortgage while on a debt consolidation program becomes extremely hard, borderline impossible.

7. Here is the kicker and read carefully. If you miss only one payment while on a credit counseling program you will be kicked off and the credit card companies will not allow you to re-enroll into another program for a year. Which will put your debts right back to where they were before, high interest and all. This is the reason why over 75% of the people enrolled in these programs fail off.

I mean think about it for a second. They put you on a credit counseling program that may last 5 years or more. We all know life has its ups and downs. If you find it pretty tight to be on the program in the first place you will fail. Any unpredictable financial problems as little or large as they may be might contribute to you missing just one payment and getting the boot from the program. You need to seriously think about how stable your finances and income security are before enrolling into a debt consolidation program to avoid being part of that 80%. The bottom line is people with a larger amount of debt such as $15,000 or more should look more towards debt settlement than credit counseling. Credit counseling is better for people with lower amounts of debt that do not have much of any problems keeping up with their bills in the first place. If you are looking to reduce your debt and get out of debt fast, then credit counseling is just not the way to go.

If you're debt is becoming a problem and you need a solution to become debt free then fill out our debt settlement pre-enrollment application. One of our debt analysts will contact you to review your current situation. If you qualify we can save you between 40-50% of your current debt and put you on the road to be debt free in two years or less. Apply now it's free with no obligation!