Myth: Credit Counseling Will Wreck My Credit Score

Fact: The act of participating in credit counseling will not directly lower your credit score per se, since it is not considered a negative in figuring credit scores. However, it is up to each individual creditor to report the status of your account to the credit bureaus. If your credit counselor negotiates a lower monthly payment for you, the creditor can legally report the account as being in arrears. However, many creditors view the fact that an individual is getting credit counseling to be a sign of financial responsibility and will report the account as up-to-date. Still, even though credit counseling doesn't directly lower your credit score, and even if creditors report your accounts as up-to-date, some lenders do still view credit counseling dimly. You may end up being denied credit or paying higher interest rates as a result.