In hind site many people wish they would have handled their finances differently. For some, this would entail living within the confines of a personal budget. For others this would translate into a lower dependence on credit cards. However, since it is not possible to turn back the clock, people are forced to live with the consequences of their financial decisions. To a great number of people, the primary consequence is a damaged credit report.

For some people who find themselves in this situation it may be wise to seek out the help of a professional credit counselor.

• Credit counselors are in the business of helping individuals regain their financial footing. They offer a variety of services including:
• Financial counseling. This includes helping customers create personal budgets, plan for financial goals, and reduce their debts.
• Debt negotiation. Some counseling companies will contact an individual’s creditors and attempt to negotiate a payment schedule that their customer can afford. Additionally, the counselors will often attempt to reduce the current level of interest.
• Debt consolidation. A number of credit counseling organizations will offer to cover a majority of the customer’s expenses through one easy monthly payment. The counselors will take the payment and distribute it among the various creditors (generally this takes place in conjunction with debt negotiation).

Once these services have been performed a customer may be well on the way to regaining his financial stability. At this point an individual should be in a situation to manage all of his current expenses. Although a person’s credit may be damaged, they have “stopped the bleeding” and are now in a position to begin the restoration process.

Despite all of the potential benefits that credit counselors offer it is important to note some potential disadvantage as well. Let’s examine a few of the most common problem areas. 

• Disreputable companies. Unfortunately, there are a large number of businesses simply out to make a buck. Even some companies who are supposedly “non profit” will use whatever loopholes they can to maximize profits. These companies are not looking out for your best interest, so beware.  One solid company that is worthy of consideration, and which has locations around the country, is Consumer Credit Counseling Services.
• Many people can do the work themselves. If an individual has the time to do some research and negotiate on his own behalf he will typically be able to obtain the same results, while saving some money.
• Affects credit reports. Negotiating debts may greatly help an individual in the long run. Often times it prevents people from declaring bankruptcy and allows them to begin restoring their credit. However, in the short term it can be damaging to a person’s credit. Once the debt has been repaid the report may show a notation that the balance was paid yet negotiated, which could prevent other creditors from approving loans or credit. As a result, negotiations should not be entered into without careful consideration.