How can getting some help hurt you? Credit counseling should be a good thing, right? Just talking to a credit counselor will not have any terrible affect on your credit score, since after all, it's just talk. Receiving credit counseling alone will not hurt your FICO model, but it will almost certainly scare potential lenders or creditors away. It's the steps the consulting company may take that could hurt you, particularly if you set up a repayment plan through the counseling agency. Once you sign up on a repayment plan, your credit record will indicate that you are getting financial counseling. Creating a repayment plan is a popular thing to do; many agencies will reach a deal with your lenders or creditors to take payment over a longer time or even to settle for a lesser amount. After you establish a repayment plan, lenders or creditors will now view you as "damaged goods" or a possible risk and you may find yourself unable to take out a loan from anyone for any reason at all. Lenders are funny - they will continue to issue credit or loans to nearly anyone who can keep making the payments, but as soon as those people begin looking for professional assistance, the lenders run away.
 

If your creditors agree to settle for less than the total sum that you owe, they will report this to the credit bureaus, which will turn up on your record, correctly, as unpaid debt. The part of credit counseling that can hurt your FICO figure is what occurs when you actually reach an agreement with your lenders or creditors. Despite the fact that you are making an effort to repay your creditors to their satisfaction, your credit score will be harmed if you agree to pay less than the full amount.

Does the probable harm to your FICO score suggest that credit assistance is a poor idea? Most of us never obtain any formal financial training in school and any person who is in heavy debt would benefit from obtaining some solid assistance regarding how to manage personal finances. Just be aware that the help you obtain may come with a temporary price. Keep in mind - you can always build your score back up in time, so get the help you need when you need it. No one applies for credit counseling unless they already have headaches that are greater than the ones you will have when your score drops.