Todd Ossenfort: A Credit Counselor can help those struggling with credit card debt

How can you pay off a substantial amount of credit card without interrupting your credit? That was a question presented to Todd Ossenfort.

How can you pay off a substantial amount of credit card without interrupting your credit?  That was a question presented to Todd Ossenfort recently from a reader, and while not easy, there are options which can help pay down those high interest credit cards and set you on the path to improving your credit.  

Dear Jason:

First of all I’m glad you wrote. You are not alone, more and more people are struggling to meet their minimum payments and carrying large balances.  Let’s start at the beginning and I’ll get to your questions as we move along. First, a question of my own for you - have you stopped adding to the balances on your credit cards? If not, you need to stop charging right away. To accomplish this you will need to bring your income and expenses in line so that you aren’t using credit to make up the difference.  A little common sense will go a long ways here.  You must start living within your means and establish a realistic budget.  I know this is not the answer you are looking for but sometimes a big dose of reality is all it takes.

A credit counselor can help you work out a budget/spending plan if you are having trouble accomplishing this on your own. Its not rocket science if you make $3,000.00 per month you can’t spend $5,000.00 per month.  You can find a qualified credit counseling agency that will provide a free counseling/budgeting session by visiting 

You can also get assistance paying off your credit cards from the same credit counseling agency that helps you with your budget by enrolling on a Debt Management Plan or DMP for short. Your certified counselor will review your financial situation and determine what action steps are most appropriate for you.

If it is determined based on your income and expenses, you qualify for a debt management plan a DMP will allow you to make one monthly payment to pay off your balances with your creditors. In addition, your counselor will communicate with your creditors on your behalf to lower your interest rates and to bring any past due accounts current.

Todd Ossenfort "many people worry that getting help to pay off debt will affect their credit."

If you are struggling to make the minimum payments now any unexpected expense could cause you to miss a payment and if that should happen your credit would suffer much more.

If you were to get assistance with paying your debts by entering into a debt management plan, the credit accounts that are included in the program would be closed by the creditor and a notation would be placed on your credit report that the account is part of a credit counseling program. The FICO credit scoring formula does not take into consideration the notation that the account is part of a credit counseling program; however, the account being closed is considered. Therefore, your score will likely drop a few points due to the accounts being closed.

What you should keep in mind is that paying off your balances should be your number one goal. What I gather from your question is you are on the brink of being unable to make your payments on time and late payments will affect your credit score more than closing the accounts.

As you know, a good credit score is important for more reasons than just getting credit, namely a poor score can negatively affect your ability to lease property, get a good rate on your insurance policies and even whether or not you are promoted at your place of employment.  

Take care of your credit!


Todd Ossenfort - The Credit Guy.