Credit Management Companies
Credit Management Companies, also known as Credit Counseling Agencies, are there as an aid to people who are in a state of financial meltdown.
They will purport to help individuals who need to manage their debt and improve their credit score. There are some advantages and some disadvantages in using such companies. We have listed a few below:
Advantages
- 1) Debt Management. Credit Management Companies will help you construct a debt management plan that will fit your budget and credit requirements.
- 2) Remove the Aggression. These companies will take on all negotiations with your creditors. One of the worst things about being in debt is being chased by the company you owe money too. This is taken away from you as a task completed by the company.
- 3) Credit Score Improvement. With the company’s help you will start getting on an even financial keel. You will pay off debts and start paying outstanding finance on agreed dates. This will undoubtedly increase your credit score, as your credit utilization will also drop.
- 4) Financial Education. As you go through the process of organizing your finances with the company, the outcome will be that you learn more about financial management. This should mean that you can make better financial decisions in the future, and avoid getting into a bad position again.
Disadvantages
- 1) Fees. You may get a local non profit helping you, but most Credit Management Companies will charge fees for their services. The fees are usually monthly. Make sure you understand the fee structure before you sign on with them.
- 2) Credit Score Impact. When you enroll with a Credit Management Company it will probably have a negative impact on your Credit Score. This will be because you are then seen to be struggling with your debt, which you are unable to pay off without outside help.
- 3) You Lose Control. When you get a Debt Management Plan through a Credit Management Company you are basically giving up financial control to an outside agency. This may be just what you want. Or, you may have a controlling nature and prefer to control things yourself. But, if you are at this stage you may just have to get on with it and let someone else do the organizing.
- 4) Potential Scams. Not all Credit Management Companies are legit. Some can be scams and engage in unethical practices. You need to do your own due diligence before entering into any agreements. Checkout blogs, talk to friends, just make sure you are happy with your choice.
Credit Management Companies: Conclusion.
For many people Credit Management Companies are a good option to help deal with their debt and improve their credit score. As long as you pick a good company and stick to your end of the deal you set up, the outcome should be of great benefit to you. You may be some time in getting your financial affairs back into order but eventually this should be the outcome.