It's a common belief that credit counseling can trash your credit score. In fact, some people even claim that enrollment in a credit counseling program is as bad as filing bankruptcy, which can often linger as a big black mark on your credit reports for up to ten years.
However, the truth is credit counseling in and of itself will have no effect on your FICO score—the three-digit number most commonly used among lenders to determine credit worthiness. According to FICO, "whether or not you are participating in credit counseling of any kind" is not considered in your score. Of course, the missed payments or charged-off accounts that may have driven you to consider credit counseling in the first place can have a negative effect. But a simple notation of participation in a credit counseling program is completely ignored by the FICO model.
So if you're interested in enlisting the service of a credit counseling organization to help get your credit back on track, don't waste your time worrying about what kind of effect it might have on your credit score. Instead, focus your attention on doing your research and choosing a reputable company that has proven it will deliver on its promises. The National Foundation for Credit Counseling is always a good place to begin your search.
