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What is credit counseling?

There's no shame in getting help or guidance, no matter what the context is. When it comes to seeking help from an outside source, you've probably heard of different types of counseling—guidance counseling, couples counseling or marriage counseling. But did you know you can receive counseling for your credit as well?

Credit counseling services from a credit counseling agency or nonprofit organization provides you with guidance and support on a variety of needs around credit and financial knowledge. Let's explore more about credit counseling and why it may be right for you.

In this article, you will learn:

  • How credit counseling can help rebuild credit
  • How credit counseling works
  • What credit restoration is
  • How credit restoration rebuilds credit
  • How you can monitor your credit score

How can credit counseling help rebuild my credit?

Before we dive into how credit counseling can help rebuild your credit, let's first understand what your credit score means and if you are looking to transition into a better range for yourself. When we talk about credit score ranges, remember that these numbers can fluctuate over time based on a wide variety of variables. Just because you have a "poor" credit score doesn't necessarily mean you are incapable of managing your finances. Perhaps you're taking on someone else's debt or facing sudden medical bills. That's OK! Regardless of if you have a good credit score or not, you can always find ways to adjust and improve.

Let's explore what the credit score ranges are below to help determine if you would benefit from credit counseling.

Who is a good candidate for credit counseling and who is not?

Once you know what your credit score is—which you can get for free when you enroll in Chase Credit Journey®—you'll be able to see where your number falls into which category. Both VantageScore® and FICO® scores range from a low of 300 to a high of 850. They are split into categories based on how low your credit score is to how high it is.

Credit score ranges

VantageScore® ranges are:

  • Excellent: 781 to 850
  • Good: 661 to 780
  • Fair: 601 to 660
  • Poor: 500 to 600
  • Very Poor: 300 to 499

FICO® score ranges are:

  • Exceptional: 800+
  • Very Good: 740 to 799
  • Good: 670 to 739
  • Fair: 580 to 669
  • Poor: 579 and below

What does your score mean for you?

If you have a good to excellent credit score, you may not need credit counseling services. You likely have a good idea of what your credit means, how to maintain/improve it and ways you can prevent it from dipping. On the other hand, if your credit score is fair to poor, you may benefit from the guidance and support that a credit counselor could provide.

If you have trouble budgeting or are a habitual spender who continually falls into debt, you might benefit from the expert advice of a credit counselor who can help build up your credit IQ and point you towards better habits that will ultimately result in an improved credit score and credit history.

How does credit counseling work?

You've decided to take the noble step of asking for help—congrats! You're well on your way towards improving your financial situation and alleviating some of the stress that comes from taking on financial burdens.

Credit counseling involves meeting with an expert who will help you plan out your financial outlook, goals, offer advice on budgeting and how to pay off your debts. Like other forms of counseling, credit counseling is essentially all about what you're looking to get out of it.

When looking into a credit counseling agency, make sure they are experienced with a good reputation. Be aware of any potential fees or additional services that might negatively impact your score rather than help it.

There may be several reasons why you're looking to improve your credit score, which may come with different approaches or types of advice. Credit counseling services include:

  • General budgeting advice
  • Bankruptcy advice/counseling
  • Student loan counseling
  • Obtaining copies of credit report and scores
  • Debt management plans

By addressing your specific needs and pain points, you may be able to improve your credit score over time by improving different aspects of your credit score, from payment history to paying down debts and more. Remember, rebuilding your credit may take time, so be patient and have grace and compassion as you go through this journey.

What is credit restoration?

In addition to credit counseling, credit restoration may be another avenue to help improve your core. Otherwise known as credit repair, credit restoration is the process of removing and disputing negative information on credit reports as a way to help improve a poor credit score.

You may have to pay a credit restoration company to remove inaccurate information on your report—they will not, however, remove a negative item that is correct. These items include foreclosures, charge-offs and bankruptcy. Note that Chase does not offer this service, and that you can dispute inaccurate items on your credit report directly with the credit bureau.

How can credit restoration help me rebuild my credit?

When you remove inaccurate information from your credit report, your credit score can be positively impacted. Inaccuracies, such as negative remarks, that don't belong on your report can indicate that you have trouble managing your money or struggle to make payments on time. Removing them sets the record straight and will help credit bureaus see you in the proper light—free from errors and other false information.

If your report has inaccurate information, it could falsely represent you, so you could have trouble landing good rates on loans or taking out new credit card accounts. When you use a credit restoration service, you can remove these inaccuracies and see this reflect positively in an updated version of your credit score. You can avoid restoration service fees by disputing the inaccurate information yourself by:

  • Submitting your dispute to the credit bureaus—Experian™, Equifax® or TransUnion®
  • Disputing the remark with your credit card issuer or bank by contacting them via email or phone
  • Writing a letter of goodwill to your creditor to express why payments were made late in order to remove a late payment from your report

Monitor your credit score with Chase Credit Journey

Whether you're on the path to improving your credit score or looking to maintain your current score as you move forward in life, you'll want to monitor your credit score. You can do so by enrolling in Credit Journey®, a free online tool that offers ample resources around your credit score, what it means, how to improve it and more. With credit monitoring services, you can be notified of factors that can impact your credit score. Additionally, by using the Credit Journey you can choose a timeframe, set a goal and get a custom plan powered by Experian that will give you actionable steps to help improve your credit score.

Monitoring your credit is a great initial step towards improving your score—you'll be able to recognize and dispute incorrect information or take steps towards meeting achievable, realistic goals for yourself.

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