If you have a lot of unpaid debt and are considering using a credit counseling service there are a lot of things you need to know before you make a decision. There are a lot of credit counseling services out there that are not as good as they make you think they are and can even leave you in worse shape than when you started.  It’s best to know a little bit about what a good counseling service will do before hand and the info below will help you with just that information.

First, when you sit down with a credit counseling company they will take a look at your debts and your income and help you to set up a monthly budget. This budget will let you see how much you can afford to pay every month to your creditors (and to them). In most cases before they start they will contact your creditors and negotiate a settlement with them based on the budget they’ve already set up. This, when done correctly, can help you get out of debt much more quickly and with less financial stress.

The drawback to using a credit counseling service is that the fact that using them will go on your credit report and, while it doesn’t affect your actual credit score, it can affect what a bank or other lender will do the next time you go for a loan or a line of credit.

Also, and this is important, credit counseling services get money from banks and from credit card companies. In effect they work for the banks and cc companies and may not have your best interests in mind.  Furthermore most of what they do you could probably do yourself and save money without the fact that you needed a credit counseling servicegoing on your credit report.

Setting up your own budget, for example, is a great way to get back on your financial feet and get those credit cards and other loans paid off.  You can also negotiate with the credit card companies and set up a debt payment plan with them as well as see if they can lower your interest rates.  You can, in dire situations, also set up a payoff for a lowered amount.

Finally, if you’re having trouble financially swallow your pride and ask a trusted friend, family member or co-worker who can handle money well to help you.  In the end it may be embarrassing for a few minutes but will save you years of financial pain.