2.Short & Long Term Credit Help

HUD and Certified Credit counselors help clients build and correct both short-term (0 to 6 mos) and long-term (7 mos to 5yrs) credit and use tools similar to what MLO's use.


THIS IS NOT CREDIT REPAIR.

HUD-Certified Housing counselors play a pivotal role in providing long-term credit assistance to individuals aspiring to achieve homeownership. By leveraging tools and programs offered through the HomePrep program—including CreditXpert—they offer comprehensive support tailored to each client's financial situation.


The HomePrep program is designed to prepare potential homebuyers by strengthening their credit profiles. HUD-certified counselors guide clients through improving their credit standing without erasing accurate credit histories. Instead, they focus on balancing negative marks using advanced tools and "what-if" scenario planning to engineer the best possible credit score. The ultimate goal is to help clients qualify for affordable mortgage options aligned with their financial capacity.


CreditXpert is a predictive analytics platform that helps mortgage applicants optimize their credit scores—often within just 30 days. Unlike traditional credit repair services, CreditXpert provides actionable, data-driven steps to improve scores. Studies show that 73% of applicants can increase their scores by 20 points or more in a short time. Housing counselors use this tool to simulate the impact of actions such as paying down debts or adjusting credit utilization, empowering clients to make informed decisions that can lead to better loan terms.


By integrating these tools and services, housing counselors create a structured pathway to improve credit health—supporting immediate homeownership goals and long-term financial well-being. 

National Foundation for Debt Management can help with short (1-6 mos) and long term (7mos-5yrs)credit needs.

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Credit Counseling FAQs

If you are new to fixing and/or building credit, check out some of our FAQs.



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Debt Mgmt vs Settling

Long Term Credit: Debt management and debt settlement impact your ability to qualify for a mortgage. Learn differences.

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Credit Help resource with HUD Credit Counselors

Get prospective homebuyers "mortgage ready"!

National Foundation for Debt Management, a HUD Housing Counseling Agency (HCA) with  certified housing and  credit counselors, can assist clients with short term credit needs like increasing scores, building credit and getting smaller credit issues handled. But they can also help clients in need of longer term credit help like bankruptcy and debt management. Counselors use credit tools like CreditXpert Wayfinder and What-If Simulator to find the best workable way for clients to get credit improved for the best mortgage possibilities available. HUD counselors keep clients and loan originators updated on the clients progress so that MLO's can keep the clients realtor apprised of the clients progress towards home ownership.

  • So, what is a HUD credit counselor?

    Certified Credit Counselors are...

    •Trusted, independent non-profit advisors

    •Advise consumers on managing their money

    •Offer solutions to reduce or eliminate debt loads

    •Develop personalized action plans to help prevent future problems

    ​


    They Provide:

    Credit Counseling

    Debt Management


    They Don’t Provide:

    Credit Repair

    Debt Settlement

  • How can a counselor help?

    They provide you with what to do and you can take action! Counselors will work with you to create a plan and resolve credit issues, improve credit scores, and build credit.

  • What is Debt Management?

    To better understand this question you need to understand both debt management and debt settlement.


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Frequently Asked Questions About Counseling

  • I'm new to all this. What is credit help?

    The number one issue that stalls clients from purchasing a home is some sort of credit issue. 


    HUD counselors can use credit tools available through credit reporting agencies and let clients know how to improve credit and how long it will take. 


    Certified Credit Counselors

    Credit counseling provides guidance and support on consumer credit, money and debt management, and budgeting. The objective is to help a client avoid bankruptcy and to provide primary financial education on managing money. Borrowers with an understanding of money management are assets for lenders as well. Certified credit counselors can also negotiate with creditors on behalf of the borrower to reduce interest rates and late fees. 


    ​Credit: Short Term Help (0-6 mos)

    Credit counseling includes:

    • Correct credit issues
    • build credit
    • improve credit score

    Credit: Long Term Help (7 mos-5 yrs)

    Credit counseling includes longer time to:

    • Correct credit issues
    • Build credit
    • improve credit scores
    • Debt management plans
    • Debt consolidation
    • Student loan counseling/debt management
    • Bankruptcy counseling
    • Modification counseling
    • Foreclosure counseling

     

    Foreclosure Counselors

    HUD-approved housing counseling agencies are available to provide you with the information and assistance you need to avoid foreclosure.


    HUD Certified HCA's will provide you with free foreclosure prevention services. If you are eligible for the loan modification or refinance program, the counselor will work with you to compile an intake package for your servicer. 

  • How can I build credit?

    Sometimes clients don't have enough credit scores or history to allow them to apply for the best mortgage. There are credit tools like  CreditXpert that counselors can use to help clients build a credit profile.

  • How can I correct and improve my credit?

    Whether you need help to correct a credit error or need to increase scores for the best interest rate and loan program, a certified credit counselor can help you. Why a credit counselor? They will provide focused help on getting your issues resolved.


    Though loan originators can also utilize credit tools from their credit reportig agency, this is not their primary job. Not all loan originators are aware of or know how to use credit tools that can help clients.Focused help to remedy your client's credit issue is the primary job of a credit counselor.  

  • What tools are available to the credit counselor?

    Certified Credit Counselors know how to use specific credit tools that allow errors on credit to be focused on. However, not all credit reporting agencies provide all of these tools.


    The Meridian Link platform allows the view for each credit item to be seen separately with Experian, Equifax and Trans Union. This results in focusing on the credit bureau that has erroneous information and can provide targeted help.


    CreditXpert Wayfinder can look at a whole credit report and tell where score improvement can be obtained with direction to improve.


    CreditXpert What If Simulator provides a tolerance dollar amount for the best balance on an account for the best credit score to be obtained.


    For clients with a past bankruptcy with a property that was included, the ADV 120 report can find the date when the property was finally foreclosed on. When a property mortgage is included in a bankruptcy, (unless reaffirmed), the mortgage payment history does not show up after the bankruptcy discharge date. Because this report is more cost and commonly pulled when a loan is in underwriting, clients and loan originators often don't know this date until too late and can result in the denial of a new mortgage if the wait timeframe after a bankruptcy is not met. 


    For clients with known credit issues, a soft pull credit report is usually used. Soft pull credits do not affect a clients credit score and do not result in a trigger lead. 


    HUD counselors specifically are also  able to run a file through the Freddie Mac Homecoach for affordable conventional  loans using a soft pull credit report. (HomeCoach mirrors the loan originator  Loan Product Advisor (LPA) automated underwriting system (AUS).)


    Check with your credit reporting agency and certified credit counselor on the availability of using credit tools noted above.

  • Is this another credit repair company?

    Using a certified credit counselor at a non-profit agency IS NOT CREDIT REPAIR. Certified credit counselors that work with non-profit HUD counseling agencies assist your client directly to improve their credit. Credit counselors can communicate directly with the three credit bureaus, Experian, Equifax and Trans Union and also with credit reporting agencies. Credit repair companies do not work directly with the credit bureaus or credit reporting agencies.


    Certified credit counselors that work at HUD Housing Counseling Agencies can use credit tools available through credit reporting agencies. These tools are not available to credit repair companies.


    Certified Credit Counselors provide:

    • Credit Counseling
    • Debt Management

    ... and not Debt Settlement.

  • What is the difference between debt management and debt settlement?

    What is a Debt Management Plan (DMP)?

    This is a voluntary agreement between you and your creditors. People who sign up for a DMP, make one lump payment each month to the nonprofit agency who then sends those funds directly to your creditors.


    What is Debt Settlement?

    There are two types of debt settlement: professional debt settlement and do-it-yourself (DIY) debt settlement

    DIY settlement does not involve a third-party firm representing you. It could involve a third-party representing the creditor. This “do it yourself” version is considered to be a less expensive form of debt settlement. It occurs when you negotiate directly with a creditor and they agree to consider your account paid for less than you owe. Creditor willingness to accept DIY settlement prior to charge-off is limited. DIY settlement following charge-off could involve a third-party representing the creditor, like a law firm, collection agency, or debt buyer. DIY settlement, while cheaper to the consumer, comes with all of the credit score damage of professional debt settlement. 


    Professional debt settlement is generally considered to be a risky and ill-advised debt repayment scheme. In the scheme, you avoid paying your debts. Instead, you send payments to a debt settlement firm. The firm then attempts to negotiate settlements with your creditors. The goal is to receive a “principal reduction,” which occurs when a creditor considers your debt satisfied even if you pay less than the full amount due.


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  • Can a counselor help with student debt?

    Another area of priority help available through HUD housing counseling agencies (HCA) is assisting clients with a refinance or repayment plan for student loans whether the loans are current or in default. This is a specialized service and is not available through all HCAs. Student Debt Solutions offers this specialized service through HomePrep. 


    HUD counseling agency Consumer Debt Counselors  can provide further indepth assistance if needed.


    A smaller number of HCA's provide student loan debt relief. Clients can be helped with debt management for defaulted student loans. 

Debt Settlement vs. Debt Management Programs: What’s the Difference?

Source: Experian By Madison Block May 21, 2019

Debt Management Defined

Debt Management

Debt management programs (DMPs) are administered by nonprofit credit counseling companies, as opposed to debt settlement companies, which are for-profit. In a DMP, the credit counseling company negotiates with your creditors to reduce your interest rates and fees, or lower monthly payments for you. You still pay off the principal amount, so your credit score is not impacted as it would be with debt settlement. Credit counselors will also help you to improve your money management skills and come up with a workable budget.


How to Find Credible Debt Management Services

It can be difficult to sort out the scammers from legitimate companies.

"Consumers should always do their research ahead of time to protect themselves," says Katie Ross, education and development manager at American Consumer Credit Counseling. "Before you commit to any debt management service, there are a few credentials you should ensure the company has."

Things to look for in a credible agency:

  • Nonprofit status is important when choosing a debt management service.
  • Check that the company's credit counselors are certified.
  • As a rule of thumb, the longer the company has been in business, the more likely it is to have reputable services.
  • If the company you are considering is a member of a national accreditation association, such as the National Foundation for Credit Counseling, it is probably a credible company.
  • The agency is licensed and bonded to do business in your state.
  • The agency charges reasonable fees. Research several different agencies to get a general idea of pricing.


Debt Settlement Defined

What is a Debt Settlement?

At first glance, debt settlement may seem like the better option. A debt settlement company has you stop paying your creditors as they negotiate a lower payment. Then, the debt settlement company pays the creditors on your behalf. Essentially, it seems like you save money and the debt settlement company takes care of getting the payments to your creditors for you.

The catch is that the lower payment they negotiate is lower than your full outstanding balance. This harms your credit score because you are not paying off the total amount. Typically with debt settlement, you only pay about 50% to 80% of the balance. Additionally, the debt settlement company does not pay your creditors while they are negotiating the lower payment, so you may begin to receive collection calls. The late payments then get reported to the three major credit bureaus (Experian, TransUnion and Equifax) and stay on your credit report for seven years. Regardless of whether your settlement is successful, your credit will be damaged.

Also, keep in mind if the debt is settled for less than the full balance, you may have tax implications because the debt that is forgiven will likely be reported to the IRS as income. Finally, you'll pay hefty fees for this service: You could be charged as much as 15% to 25% of the amount settled.


The bottom line: Be on the lookout for companies that try to make money off your debt by charging you fees without offering real help. Choose a company that understands your situation and will work with you to reduce your debt without tanking your credit scores or taking advantage of you financially. While debt can be stressful and difficult to deal with, you should make a well-informed decision before choosing a debt settlement company or a debt management program.