Many people wonder if consulting with a credit counseling agency will affect their credit score. First of all, remember that your credit score is based on the information contained in your credit report, so let's start there.
Simply obtaining counseling has no bearing on your credit score, as it is not reported to the credit bureau. Therefore, people should not have any hesitation about seeking the help they need to resolve their debt, housing or other financial issues.
One of the debt resolution options available to consumers through a credit counseling agency is a Debt Management Plan (DMP). A DMP is a structured workout plan through which your creditors are repaid under new terms. Once the proposed payment terms are agreed to by the creditor, they become the new acceptable monthly payment, and are reported as such to the credit bureau. Thus, as long as consistent monthly payments are made by the consumer to the agency, and those payments are disbursed in a timely manner to the creditor, most creditors will report the consumer as current to the credit bureau.
It is likely that consumers who complete the Debt Management Plan will have little trouble obtaining new credit, if desired. In addition to being approved for credit cards, many go on to purchase houses and cars.
To hear a discussion of this topic by FICO, the inventor of the most widely-used credit scoring model, click on the link below: