Why You Shouldn't Use a Credit Counseling Service to Repair Your Bad Credit
Contributed by Deborah Zeitler
Isn't it true that credit counseling companies are a good way to repair my bad credit?
Many credit counseling companies advertise that they're able to repair your bad credit and help you get back on your feet. This is only partially true. While a reputable counseling service may be able to help you pay off your debt by negotiating with your creditors to reduce your overall debt, the fact that you have used a credit repair counseling service will show up on your credit report and can be a negative mark against you.
Why would using a credit repair counseling service show up as a negative on my credit report?
Believe it or not, your attempt to do the right thing and repair your bad credit by using a credit counseling service is a red flag to any potential creditors that you are a bad credit risk. They know that in order to pay off your debt, the credit counseling service you used probably negotiated with your creditors to get them to agree to forgive a lot of your debt.
Why would I be considered a bad credit risk just because I tried to do the right thing?
Because of two reasons: One, if you get into financial trouble again, for whatever reason, they know that they might have to agree to reduce a significant portion of your debt if you use a credit counseling service again in the future. And two, you would still be in a position to file for bankruptcy should you fall on financial hard times again.
