Are Credit Counseling Agencies Helpful or Harmful

By Pay Off Debt Advisor | May 25, 2009

These days credit counseling agencies are popping up everywhere offering relief to those who are deeply in debt – or are they?

The answer is, unfortunately – it depends.

There is a myth that visiting a credit counseling agency is automatically terrible for your credit and will send your credit score plummeting. According to FICO, the leading credit score company, they do NOT in any way factor in visits to a credit counseling agency when people figuring out credit scores.

Things they do take into account: late payments, missed payments, judgements, liens, and a high credit balance which is charged to the limit.

However, the fact that a consumer has visited a credit counseling agency will go on their credit reports, and some lenders might potentially view this as a negative.

Consider this, though – a person who is seeking credit counseling ALREADY has bad credit. If the person uses the credit counseling wisely, pays off their debts and starts making all of their payments on time – this will boost their credit score significantly and the minor matter of having sought credit counseling will not be viewed with disfavor.

Remember, though, to only seek non-profit credit counseling agencies; there are numerous scam agencies springing up these days. A good way to find a legitimate agency is to seek out agencies that are accredited by the National Foundation For Credit Counseling; search for it online and if you need a credit counseling agency, use one recommended by them.