Does credit counseling affect my credit score?
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I’m 28 and very bad with my financials. I’ve managed to accumulate a lot of credircard debt. I have a few late payments and other derogatory items on my report.
After considering my odds I’ve decided to enroll into debt counseling program, but I know that they report to the credit bureaus, so I’m afraid it will ruin my credit even more.
Does anyone have a clue about it?
It doesn’t affect your score.
Enrollment into debt counseling program is reported to the credit bureaus and will show on your credit report. This situation on itself will not affect your credit score. It is one of the situations excluded from the FICO score formula.
However, you must understand that any actions that you take based on the credit counselor’s recommendation WILL affect your credit score as any other action that you take, regardless of the credit counseling.
For example – if the counselor advises you to close an account, settle a debt for less than the full amount, apply for a secured credit card etc., it may have a negative or positive effect on your credit score.
Additionally, any late payments or any other derogatory information occurring either before or after your enrollment into the plan may also be regarded negatively.
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