Keeping a good communication relationship with your bank and credit card companies can prevent the shock of finding out that your credit score is too low for the new car you desperately need.
With a credit score of 590, $200 in the bank, and the car's transmission in pieces at the shop, some emergency financial help may (not will, but may) get things put back together.
Some banks will help counsel clients on how to set a budget or get debt under control, but when it's an emergency, call in a debt or credit counselor. In Kentuckiana, there are 41 companies in the business phone book but only a few are actually local including A plus Credit, Consumer Credit, and Quality. The other numbers link you to a national phone center. The AICCCA, a national association, lists its local members on the web.
A good credit counselor should be honest, knowledgeable, and bonded. (Kentucky does not require a bond for all counselors.) No counselor will wave a flag saying "I stole 3 identities last year", or "I use big words so you trust me but I'm a high school dropout." The bad news is the people we trust to be a watchdog, the BBB, may not have a rating for everyone in this group. The good news is. Wait. I'm thinking. No. No good news. Anyone wishing to hire a credit counselor must use his best judgment, ask for any education or credentials, or even talk to people in the waiting room.
We often judge honesty by people's faces. If you believe that, go ahead. But beware, it is usually unreliable.
What can a debt or credit counselor do for you?
Debt Management "We work with them to get their credit scores back up," says Karen from A+. Work with creditors to drop high interest rates (as much as 29%) to 6 or 7%. Some counselors will help cancel credit cards and reduce payments.
Debt Negotiation A counselor can intervene with a creditor and arrange better terms
Debt Settlement This removes some of the debt and reduces your payments, but "hurts your credit until it's all done," says Steve of Discount Debt Solutions.
Bankruptcy Richard Schwarz and other attorneys deal with clients where the techniques above don't work..
- Education Besides Dave Ramsey, self-help classes are available from some counselors (Aplus ) and local schools. For current classes, contact IUS or U of Louisville.
What credit counselors cost.
The national services may charge 15-20% of the debt; locally you can get help for less than $500.
Check here soon for information on a course for Divorce and Debt from a A plus.
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