What Is The Difference Between Debt Consolidation and Credit Counseling?

If you are in debt, and want to consider your options, it’s important to know the difference between credit counseling and debt consolidation.

What Is Credit Counseling?

Credit counselors are a bit like financial doctors. They sit down with you and do a thorough physical on your finances. They look at the amounts you owe, all of the different accounts that you owe, and your current budget.

Afterward, they work with you to lower your interest rates, get fees removed on your accounts, and bring everything current.

Then, instead of making many monthly payments to all of your debts, you will pay the credit counseling services a single payment, and they will make the monthly payments to your creditors on your behalf.

What Is Debt Consolidation?

Debt consolidation is a form of leveraging your debt. It means that you will take out a new loan (usually at a better interest rate) in order to pay off many loans, like all of your credit cards.

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