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Credit Card Myths: Credit Counseling Will Get You Doomed

By George Hauser
Published: Friday, March 26th, 2010

A person’s credit score is one of the basis for which a lender would determine the possibility of granting future loans for that person. Credit scores are computed through many ways but usually through the FICO computation. People always aim of improving their credit score so that they would be granted loans, but a majority of these people tend to get steered to believing in fast and easy methods of how to improve their credit scores which in reality, do not actually work.

Like for example being convinced that credit counseling will do a great deal of damage to your score as much as bankruptcy. This is an absolute lie. It can be proven by taking a look at the current FICO formula for computing credit scores; the FICO computation of a credit score disregards records of credit counseling in a person’s file.

Though FICO computation ignores references of credit counseling, the possibility of getting admitted for a loan can still be affected by it. Lenders have the ability to report you as late because you are not able to comply with deadlines for payments, you haven’t paid for what you originally owed, or your credit counselor might be the one who fails to send payments on time. Late payments will damage your credit score.

But lenders don’t base everything from a person’s credit score, they’d often look into other parts of the applicant’s life as well, his income, is one of those other factors. Lenders will take a look how much money you could have, how much of that money is put away, and how active your accounts are in billing debts. Some will find credit counselor troubling because they might lead to late payments and are also hard to understand in certain levels while others find it helpful to improving their credit score by getting credit reports about their accounts from time to time and planning out how to comply with the needed payments.

Most lenders who are not big fans of credit counseling treat their applicants in the same as one who files for a bankruptcy. There is also the type of bankruptcy that requires for a repayment of the plan; this kind of bankruptcy will allow you to erase most of your debts. Similar people in these conditions might also be able to qualify for a loan from these lenders, although interest rates increase if you have perfect credit.

If you have plans of getting mortgage soon, and you’ve noticed that you’re already behind with debts, it would probably be a smart choice to avoid credit counseling. If you’re in trouble however, looking for a quality credit counseling agency might be the right kind of help you need. Quality and top performing credit counseling agencies will help you manage your payments and make sure that you catch up with them before you get evaluated. They will also help people into meeting all the desired requirements of a person applying for a loan, scheduled payments, and a better credit score.

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