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No. of Recommendations: 13
"Dave" says...

Dave Ramsey seems to stick with a lot of stereotypes that aren't always true, and not always helpful. In this case, what "Dave says" is flat out wrong in many ways. Dave wasn't discussing 'credit counseling' as practiced by the organizations certified by NFCC. He was discussing 'debt relief' services. They are two different things - the problem is many organizations masquerade themselves as 'credit counseling' when they are 'debt relief' and it's up to the consumer to weed through the chaff to find the wheat.

'Credit counseling' when done by NFCC certified organizations:
- examines someone's debt, income and expenses
- helps them budget (looking at debt, income and expenses, including recommending expense cuts) to pay of the debt
- if necessary, will recommend bankruptcy
- can negotiate with creditors for lower payments and/or settlements, but does not 'hold' payments solely for the purpose of negotiating a lower payment
- uses trust accounts for client money held for creditors
- has reasonable (sometimes no) fees, based on the client's ability to pay

'Debt relief' typically does as Dave suggests, and holds client payments (often not in trust funds) to force creditors to write off debt, and then 'negotiates' settlements, all the while, charging outrageous fees.

Dave also seems to stuck in the past on his understanding of credit scoring. It used to be (several credit score models ago) that using a credit counseling agency impacted your score negatively. In the current credit models, it's not a derogatory score reason. If you want to check that, you can go to and put in each number, from 0 to 9 and see a list of all of the credit score reasons used by the credit agencies for Vantage scores. And here's the list for FICO scores: (Note - even though the FICO score list is dated 2013, it's the most recent one that's been published by FICO. If you want to check that, you can go sign up with FICO here but you have to register. (I did)) There is no reason on either of the lists that mentions credit counseling. Credit counseling CAN be noted on your credit report (without affecting your score), so lenders may use the fact that you are on credit counseling to deny making a loan to you, but it's not because it impacted your credit score.

If you use one of the 'debt relief' services, where they withhold your payments, that is very likely to have an impact on your credit score, as your payment history is one of the main components of your credit score, and having written off accounts (what happens after about 6 months of withheld payments) is a definite derogatory mark for your score.

-not a Dave Ramsey fan
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