Originally Posted by mum4boys
credit counseling wrecks your credit the same exact way a bankruptcy does.
Before I begin, let me say that we've made some truly stupid financial decisions in the past, and we know it. Credit counseling was not one of the stupid decisions though.
We started credit counseling about ten years ago with about $20K in unsecured credit card debt.
Within 12 months of starting the program, we leased a brand new $28K SUV at a very good interest rate.
Within 24 months, we started accumulating MORE unsecured credit card debt (while still paying on the orginal $20K through credit counseling).
4 years into it, we'd paid off the original $20K. BUT we'd added another $50K to it. It was way too easy to add credit cards to the program. We'd max out one card and then go online to add it to consumer credit counseling. Then we'd start on another card. (See, I told you we weren't bright.)
Oh, and at about that point, we bought a brand new $40K SUV at the best interest rate available at the time.
We had *just* (like within 60 days) paid off all of our unsecured credit card debt when we closed on our house. Got the best interest rate available at the time, no money down, fixed rate mortgage. All of the notations that we'd been on CCCS were still showing...but nobody really cared. All they cared about was that our debt to income ratio was ok (it was great) AND that we'd been paying CCCS on time every month. And boy could we show great payment history on that one! 8 years worth of one time drafts, never missed a payment, and they actually liked that since we were first time home buyers.
Point is, CCCS doesn't always 'ruin your credit'. Truth is, most people's credit is already 'ruined' by the time they get to CCCS with tons of late payments and such showing that are just going to take time to age off of your credit report.
Simply being on CCCS doesn't affect your credit score at all. The only place it even shows up is in the 'comments' section under each account if the creditor chooses to make note of it. It's the late payments, maxed out accounts, etc that will tank your score.