About credit counseling ...re:mortgages

[AngieM2]

Hey folks,
My older daughter works for a mortgage company.

Tonight she was telling me how they were in meetings today about credit scores, etc...

The one thing she wanted me to know ----- if you use a credit couseling service to get bills down... that is considered a "default" on a contract (you are not paying what you agreed to pay, etc), and will be counted against you and bring your scores down. Therefore; no credit extended or very high percentage rates.

Just thought my homesteading "friends" should know this.

AngieM2

[Gary in ohio]

Angie, Yes it will count against you as it should and your TOTAL SCORE will determine if and what your rates will be. To say using a credit counsel will get you very high percentage rates is WRONG. Your score is your score, Depending on the company issueing the credit they will determine what scores are acceptable risks.

[coalroadcabin]

If your alternatives are bankruptcy or credit service-I'd recommend you go to a credit council service. It will lower your credit score, but it's better than bankruptcy.

[lyteora]

Several years ago we went though credit counseling, We had both been laid off from work for several months, new baby, and addmittingly bad habits we had to learn from the hard way. The companies were calling and calling, and we could not make minimums anymore, not knowing what to do we first spoke with a lawyer about bankruptcy, but felt really bad about that route because it was our dept. My SIL brought up the CCCS so we went to see them and decided that was the best route, they said it would not be on our credit report that we had gone though them, they must have meant they don't report it. Sears did and a few years later after we had paid everything off and finished with cccs we tried to by this house, the first bank we spoke to noticed we had gone though cccs and said we might as well have filed bankruptcy! They considered it just as bad! Luckly the local back was willing to give us an inhouse mortgage. But we were very upset, how is getting your dept undercontrol and paid off a bad thing? Anyway it worked out.

It does depend on the mortgage company, and how badly they want to make money off you--remember, most of that money is made up front in fees. Then if they sell the loan later, they don't care if you default....

Imho a lot of people who have no business getting any kind of credit are getting it these days. I don't blame any company for reporting bad debts, like Sears. It is still too easy for people to declare bankruptcy and start over.

[lyteora]

I agree, it is way too easy for people to get credit cards, I dont think people really understand their credit at least we didnt at first, like I said we learned the hard way. I don't think these companies should be giving them out to college students or recent high school grads at least not with the large available credit.

"But we were very upset, how is getting your dept under control and paid off a bad thing?"

Lyteora, it is because the bankruptcy lawyers and so-called "credit counselors" only say what I quoted (from you) above in their ads, they do not tell the TRUTH, which is that bankruptcy is a legal way to thumb your nose at people who lent you (general you here) money in good faith, and expected you to pay it back in good faith. Even when you go through the counseling services and they "negotiate" that lower rate for you, it still is unfair to all the other people who have been paying their bills on time at the rates they agreed to in a contract. The only people making money are the lawyers and the counseling services. Your credit is still ruined, and the people who lent you the money are still stiffed....

I'm glad you learned from your experience--many never do. I agree with you about students and credit cards.

This is an interesting article about how a company going bankrupt affected other people (artists and craftspeople in this case) down the line. Every bankruptcy hurts other people.

http://www.craftsreport.com/march02/cs_pottery.html

Originally Posted by lyteora

But we were very upset, how is getting your dept undercontrol and paid off a bad thing? Anyway it worked out.

But, you only paid off a portion of your debt. Really the same thing as if you had declared bankruptsy. The credit counciling company went around and negociated lower rates for you at all the places you owed money. These lower rates were accepted instead of facing your impending bankruptsy - in which case a judge simpley tells each creditor what they will get, period.

So, they negociate with the credit councilor, but you did not pay your debts _in full_.

It should be recorded as a negative score, shouldn't it?

I don't mean this to be a negative message to you, just trying to explain it. Glad you got things worked out as best you could and are moving on.

--->Paul