Understanding Debt Consolidation Credit Counseling

Debt consolidation credit counseling is one form of a broader type of counseling provided by many financial organizations and businesses.  If you find yourself in over your head with too many unsecured debts (credit cards and certain types of loans), debt consolidation credit counseling is one possibility among several.  A trained credit counselor should explore this option with you if you meet certain criteria.  Namely, if you are not so far gone in your current credit dilemma that your credit rating is shot, then you may qualify for an unsecured consolidation loan.  A debt consolidation credit counseling specialist may suggest this option for those with fair-to-good credit histories and/or those who have a large amount of equity built up in their homes.  Of course, your debt-to-income ratio comes into play in all cases as well.  If you do not qualify for an unsecured loan, a knowledgeable debt consolidation credit counseling mentor may recommend taking out a home equity loan (or line of credit) or hiring a professional debt management service in order to reduce your monthly payments and get those credit cards paid off faster.

 

When talking with a credit counselor, it’s important to mention debt consolidation if the counselor doesn’t bring it up fairly early in the discussion.  Debt consolidation credit counseling involves different, more in-depth issues about your finances and credit history, all of which will need to be discussed at length.  If you wait too long, there may not be time to cover all the necessary ground during your counseling session.  Things like your total debt load, monthly income, mortgage status (liens, payment history), and other property that may be used for collateral will need to be explored during your debt consolidation credit counseling session.  If you believe that a debt consolidation loan is a real possibility, it’s wise to have such details written down prior to your counseling session.

 

One note of caution.  Understand that debt consolidation credit counseling is often done by an employee of a debt consolidation loan company.  Some companies train their counselors to push virtually every client toward their loan services.  It is how they make their profits, after all.  Your best defense is having a good understanding as to what your options are in a general sense.  Spend some time researching home equity loans and lines of credit, zero-interest credit card balance transfers, secured loans, and debt management solutions.  Then, when you meet with a debt consolidation credit counseling mentor, you’ll be armed with the knowledge to defend against any ‘hard sell’ tactics that come your way.

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