Reply
New Visitor
Posts: 1
Registered: ‎08-26-2009
0

Credit Counseling and FICO Score

Hello,

 

I recently met with CCCS to set up a debt management plan.  I have been doing pretty well paying off debt on my own but my interest rates are high and I thought this would be a good time to bring in help to get me the rest of the way and also free up some monthly income.

 

But before I sign up I want to make sure I understand if or how this could impact my score.  I've seen articles that indicate it will impact my score (if the creditor reports it as "not paid as agreed") and articles that say it will not impact my score at all (FICO doesn't want consumers penalized for joining a plan).

 

So I thought I would go to the source to ask the question:  how will signing up with a debt management plan (presuming I pay on time) impact my credit score?

 

Many thanks,

Artsy

 

Valued Contributor
Posts: 2,682
Registered: ‎07-29-2009
0

Re: Credit Counseling and FICO Score

Hi...you may want to use the search feature and search the forums in order to read other peoples' experiences.

 

From my understanding, it has indeed negatively impacted scores and reporting for some people.

Super Contributor
Posts: 5,703
Registered: ‎10-06-2007
0

Re: Credit Counseling and FICO Score


LynetteM wrote:

From my understanding, it has indeed negatively impacted scores and reporting for some people.


There is no long term affect on your FICO score from being in a DMP.  In the short term, I dont know if there was an affect on my score when I started the program since I was not FICO aware until I was close to finishing the program and anyway it is a mute point since you wont be applying for any credit while in a DMP.

 

By the time you finish the program, not having any CC debt will give you much higher score then when you started and even if you had lates prior to DMP, by the time your are finished (5 years), they will be 5 years older thus not hurting as much (if any). 

 

The TL statment saying the account was being managed by a CCCS as zero impact on your FICO score and as far as my own experieince goes, hasn't stoped me from getting credit at the best rates.

 

The trick in being in a DMP is that you must be able to afford the payments and never apply for new credit while in the program.  if you have a BofA product in the program, that goes double.

11/28/2014 FICO: EQ: 796 EX:788 TU:803
Super Contributor
Posts: 5,703
Registered: ‎10-06-2007
0

Re: Credit Counseling and FICO Score


Artsy wrote:

But before I sign up I want to make sure I understand if or how this could impact my score.  I've seen articles that indicate it will impact my score (if the creditor reports it as "not paid as agreed") and articles that say it will not impact my score at all (FICO doesn't want consumers penalized for joining a plan).


As long as you are in a CCCS - Debt Managment Plan and not a Debt Settlement Plan, they cannot report you as not paying as agreed since the DMP company negotiates a payment that will have the account PIF in 5 years which obviously is paying much more than the minimum payment you were paying before.  You pay the full principle off plus in most cases some interest.

 

If they are a debt settlement company, they will reduce the principle you owe and it will destory your credit and possibly rip you off in the process.

11/28/2014 FICO: EQ: 796 EX:788 TU:803
Highlighted
Member
Posts: 6
Registered: ‎02-03-2009
0

Re: Credit Counseling and FICO Score

I was told today by a mortgage loan officer that me being in a DMP was negatively affecting my score. I came on here to see what others said about this topic. He didn't say that I wasn't able to qualify because I was in a DMP, just that it was bringing down my score. Not sure I believe him though.

 

Any thoughts?

Super Contributor
Posts: 5,703
Registered: ‎10-06-2007
0

Re: Credit Counseling and FICO Score

I do not know how my scores were effected while I was in DMP but the biggest effect on my score back then was CC util.  IMHO I didnt think DMP had any effect on my score but I was able to get a mortgage while in the program.  worst case you could refi once you complete the program since as you pay down the debt, your scores will go up and depending on your negative information, 5 years of DMP will add 5 years to any derog which might also help as well.

 

Be carefull if you have any BofA products in DMP since they kicked me out of the program when I got a sams card which lead to a major derog which I have to wait 3 more years for it to go away.

11/28/2014 FICO: EQ: 796 EX:788 TU:803
Established Contributor
Posts: 852
Registered: ‎09-18-2007
0

Re: Credit Counseling and FICO Score

I was still in a DMP when I bought my house last year.  No problem.  However, it was in the last year or so of the DMP.  Personally, I think a note on a credit report that you are in a DMP shows you are actively working on your credit...but I am not the FICO score goddess......yet.

Starting Score: EQ 679, TU 697
Current Score: EQ 680, TU 672
Goal Score: EQ 720, TU 720


Take the FICO Fitness Challenge

Valued Contributor
Posts: 1,978
Registered: ‎04-07-2009
0

Re: Credit Counseling and FICO Score

Here is a link to an article on the subject

 

http://www.bankrate.com/finance/debt/debt-management-plans-affect-your-credit.aspx

 

 

Make sure you understand what the DMP agency is going to do to help you. Sometimes what they do can hurt your score. IE settling account

 

 

 

 

Equifax My FICO score 815 5/28/2012, 818 on 7/28/2014 . Average of Accounts 12 years and no Installment accounts. MyFICO TU 810 6/26/2012 809 4/21/2013 MyFICO XPN -805. 2/26/2014 Discover TU FICO 813 App free since 9/2011
Super Contributor
Posts: 5,703
Registered: ‎10-06-2007
0

Re: Credit Counseling and FICO Score

Great article.  I wish I followed

 

"They need to look at their statements," says Carol Wagner, a certified credit counselor with Consumer Credit Counseling Service of the East Bay. "They need to be vigilant."

 

More carefuly.  I have 3 more years to pay for that mistake.

11/28/2014 FICO: EQ: 796 EX:788 TU:803
Moderator Emeritus
Posts: 32,869
Registered: ‎08-04-2007
0

Re: Credit Counseling and FICO Score

Split your post to form a new thread within Understanding FICO Scoring

Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
† Credit cards for FICO Score ranges: The score ranges are guidelines based on actual applicant approvals and having a FICO Score in a particular range does not guarantee you will be approved for credit cards recommended in that range.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.