Payday Loans Debt Consolidation

Do The Services From A Payday Loan Debt Counselor Affect Your Credit?

If you are considering hiring a payday loan debt counselor, there are several things that you need to take into your careful consideration. Many people get confused with the terms ‘debt counseling’, ‘debt consolidation’, ‘debt settlement’, ‘debt management’. You must have a thorough understanding of these methods. They all work differently with the only objective to provide you relief from your debt problems. But, they are still inter-related. For example, a counselor may provide consolidation, settlement, or management services. At the same time, it is also true that you do not necessarily need to hire a company to use the method of debt consolidation; you can do it on your own if you plan carefully. An important thing to note here is that whenever you hire an agency or a counselor to assist you with these processes, it may affect your credit also. Following is a brief overview on it.

How Your Lenders Report To The Credit Bureaus

When you hire a payday loan debt counselor to deal with your lenders on your behalf and make payments toward your debts according to debt relief program, lenders are likely to report the payments to the credit bureaus as “paid in settlement’ or ‘paid as per a consolidation program’. If they have already changed the status of your debt accounts as ‘in collections’, this is also reported to the credit bureaus. These are negative entries on your report, which eventually damages your credit score severely. Therefore, you need a counselor who is highly experienced in his or her work and so can negotiate a fair deal with the lenders in your favor. For example, the counselor must be able to convince your lenders that they must not report such things to the credit bureaus. For example, as part of the agreement, they must agree to remove the collection status from your debt accounts. Besides that, even if they are waiving penalty charges and reducing interest rates or are agreeing to accept a lower amount of money than is outstanding in your name, they must report the debt repayments as ‘paid in full’. This way, you can protect your credit score. In fact, this will eventually help you improve your credit worthiness provided you do not make further defaults.

It is very important for you to keep in mind that your lenders are not legally obligated to accept any proposal that you send through your payday loan debt counselor. So, hire a counselor only when you are sure that your lenders are willing to work on debt relief programs.


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Posted in Payday Debt Services, Payday Loans Debt Consolidation | 1 Comment »

One Response to “Do The Services From A Payday Loan Debt Counselor Affect Your Credit?”

  1. Ritchie says:

    Payday loan debt counseling programs are the necessity for a person when he/ she can not manage his/ her debts then they have considered for taking the services of a debt counselor. Debt Counseling programs come with a very different approach, if you found yourself capable of doing some simple calculations and you have good negotiation skills then you can do it yourself without spending a single penny. If you are not sure about your abilities then you have to hire a counselor. The most important thing is that you must take your creditors in your wish of taking the consolidation program. They can deny for such programs but your counselor has to convince them for it. You have become ready for counseling programs but such entries in your credit report will ruin your credit score. A genuine professional’s counselor must have the positive attitude to convince the lenders not to report your accounts as paid in settlement or in collections it will affect your score. Some points should be very clear that your lenders must not mention that they have waived off penalty charges or have reduced interest rate, they must mentioned in your account as “paid in full”.

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