will consolidating with Care One hurt my credit score?

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  • I currently have over 6000.00 dollars worth of credit card debt, which is not a crazy ammount, but its high. I want to eliminate it & make only one monthly payment. I just heard about Care One from a friend, so I am interested and curious to find out more before I decide to consolidate with you guys.

    My main question is: If I decide to use you guys to pay off my CC debts, will it hurt my Credit Score? I currently have a good score & I don't want to hurt it.

    another questtion is, will Care One automatically close my credit cards when you pay them off? I know that doing this does hurt my credit score & will leave me with no credit cards for emergencies.

    Last question: Can I raise my monthly payments to Care One, so as to pay off quicker?

    thanks for your time!

    -Connie Hendricks

  • Here's my situation. I have about $15000. I’m a smart girl, I have a great job, but I am financially retarded. Bottom line is: I spent too much.

    I was paying about $700 a month (it's a total of $410 minimum on all my cards), but my interest rates are so high (19.9%-32.9%). I never missed a payment, I was never late, but my balances are over 50% which was cause for the crazy APRs. I realized I was paying all interest/finance charges and hardly any to principle. I've called all my creditors to ask for an APR change but they didn’t budge. So for example, on one of my cards has a minimum payment of $140 in which $90 were finance charges on a $3000 balance. I hardly see my balance move. Doing some calculations, my debt would never get paid off at the rate I was going, and I would pay double in interest over the course of 30 years.

    My program is debt consolidation. I enrolled because my APRs and making $700 payments were ridiculous. I give a set payment of whatever CareOne calculated of which it breaks down to: the sum of minimums on all cards enrolled, and a $50 service on top. How it works is: you keep making this steady payment over the life of the program; your minimums has decreased because they negotiated an insanely low APR to pay off the cards. 

    Example: $500 payment to CareOne= $50 service fee and $450 to pay towards 5 cards. Let's say, all 5 cards have a $90 minimum payment (=$450). They will pay those $90 minimums until low APR has been successfully negotiated. If all your APRs goes down to let's say 5% in which your minimum payment is now $20 for all 5 cards (now total all new minimums are $100), CareOne will still pay the $90 towards that card ($70 extra towards principle). And you will successfully pay off the card faster.

    (And if all this is wrong, please someone from CareOne or another member reply to this post and I’ll have to rethink my membership.)

    Credit score was the very first question I asked CareOne and wanted to make sure they gave me a clear answer over the phone (which they didn’t). I also have an ok credit score and I don’t want it to go south. This is what they emailed me to clarify after enrolling:

    "We realize that you are taking great steps toward building a strong financial future with your commitment to pay off your existing debts through our Plan. However, we cannot make any assurances about the state of your credit or credit score. This is beyond our control and outside the scope of our program. We do not notify credit reporting agencies of your participation in the Debt Management Program. Some of your creditors may report your participation. Please keep in mind that it is not uncommon for your creditors to report your credit status on an infrequent basis; as a result, the information contained in your credit report could be outdated. By verifying the status being reported by your creditors, you can take the first step in making sure that your current status is being reflected on your credit report. Please contact your creditors directly regarding the credit status report should you have any questions."

    And they are right. But honestly, I believe that if CareOne is making minimum payments towards your cards, you should not see you credit score be negatively affected. The only problem is, some creditors don’t like to see payments come from a third party for some reason (I mean why??? If they are getting paid, what is it to them where they get payment from??)  Beware of Debt Settlement companies that take your payment and hoard it into an account to make a settlement. They miss your payments on purpose so that you are 30-60 days late in order to negotiate a lump settlement using the funds they are "saving" for you. And other Debt Consolidation companies claim to pay off your debts in full right off the bat, but still do it in a settlement fashion. So you pay them $300/mo over the course of 5 years (=$18000) for your $18000 debt, they negotiate down to something like $10000 in which they keep $8000 they collected from you. (I'm in the wrong business...) I’ve done my research, I know what I’m talking about, and these options will totally screw your credit. True debt consolidation is much like a personal loan, to pay in full all your cards, close them out, and you end up paying a monthly payment at a set APR. But no one is lending money out like that right now.

    You will not be able to use your credit cards as told to me. Supposedly, you will continue to receive your statements, but the account is essentially closed for use. Creditors will freeze access to new credit or any remaining credit as part of the negotiation.

    You can always raise your payments to pay it off quicker and they encourage that. I will be doing that for sure.

    The way I look at it, I’m paying $50/mo (and that’s how they make their money) for them to negotiate a lower APR on my behalf and help me get out of this situation. I understand I can’t use these cards anymore, but that is what got me into trouble in the first place. I knew I couldn’t do it on my own, and honestly this was a scary thing to do, but it was a step I had to take to get on track of my finances. I now have a budget, I try sticking with it, and so far, it’s working. I really have to be disciplined.

    Hope this information helped! Trust me, I was scared to get help.

  • Sounds like you know what you're talking about Kimberly.  I have a question also.  I know that when you close your credit cards it negatively affects your credit score. Is careone closing my accounts, or are they just putting them in some kind of "on hold" type of status? I like the program and I've had no problems to date, so either way I'm going to stick with it until I have everything paid off. 
  • The care one doesn't close your credit card accounts, the actual credit companies do or you can do it yourself if you so choose.  With the credit companies closing them they may (or may not) reopen the accounts after the debt is paid in full.  So if there is a card that you don't want closed don't add it to the program.  

    I can say I have A LOT more credit card debt then everyone that has posted combined.  I had an ok score but since I have joined care one my credit score has actually gone up.  I has gone up at least 30 points the last time I checked which was about a week ago.  I was very hesitate about joining care one because I have never even considered doing anything like this before.  I figured I got myself into this mess I had to get myself out.  If I did it on my own I would have paid over $70,000 in interest and it would have taken my 30 years to become debt free.  Now I will be debt free in about 5 years.  Which is great for me considering the amount of debt I have.

     So anyone that is considering not joining or worried about care one don't be.  Yeah there are some issues but nothing is perfect.  I can actually say that joining is the best thing that I have ever done.  

  • Yes, it will hurt your credit I was told after the fact of signing up on CareOne that it was just like filling bankrupcey and it is actually worse and it shows on each accout that you are on credit cousling the only thing different is the moral factor you are taking responsiblity for your wrong doings.  The thing that you should of said no to but didn't.  Our" I wants" got to us and now we are paying for it and it can hurt up to 2 years and that is why they set you up for the 2 years program.  It isn't a bad program but I think that with us knowing that we are doing the right thing and paying it back but just a little cheeper is better and we should not be pentilized for correcting our error. What we are doing it really helping the economy instead of filling bankrupcy which really is the easiest. Nothing is going to help this economy except taking responsiblility for what our flesh wanted and what this program is going to do is save you the headaches of dealing with the continous phone calls and the harasement of not ever being enough and a better life style becuase you feel that you are on the right track,  So yes I am glad that I signed up for this program I would of like to know that before doing this but I know right know I am closer to getting out of debt.  My life is better and I have the Freedom and to know that they are taking care of and you do not have to worry about all of those dates. 

    Good luck and I hope that everything works out.

     

    God Bless 

     

     

  • I have a credit monitoring service through Experian, and I can honestly say in  mine it says nothing about Care One, or the fact I am on a program.  But, some accounts still show that I am negitive standings, but the overall report shows no more deliquent accounts.  Either way if you use Care One or not and have a large amount of debt your credit will drop.
  • Yes, because you are agreeing to pay back the debit under different terms then you orginially agreed to when you got the credit cards.  My credit took a huge dip and has now recovered some...and by huge I mean huge.  I have good credit before I started the program...750 after I started I check my credit score and it had dropped into the high 400's.  i was shocked because I thought I was doing something good for myseld, taking control and so one.  Now that I have been on the program for over a year and I have pd off some accounts my credit score is now 600.

    In most cases once your pd off the account is closed, this is my experience, but I am ok with that.  i don't ever want another credit card.

     Yes, you can raise your monthly payments.

     

    All in all I think it's a good program and it has worked for me...it's a little bumpy in the beginning but I think long term it is a good thing!

  • Which program did you sign up for the (DMP) Debt Management Program or the (DSP) Debt Settlement Program?

     I just enrolled in a DMP and the first question I asked was about my credit Score... The consultant that I spoke with assured me that my credit score would not be affected since I'm using the DMP! However, he did say that the DSP would likely hurt a person credit score because it is more of a last resort and CareOne would have to use a different approach. 

    My first payment is set up for the 25th of this month. I am confident that this was the right thing to do, but i still hope it does not hurt my credit score!

    Thanks for the post! 

     

  • Good afternoon and thank you all for posting in the Community,

    Ernolling in a credit counseling plan may have a negative effect on your credit and impact your ability to secure new credit. The intent of this program is to assist our customers in paying off their debt more quickly than they would be able to on their own by working with the creditors to provide benefits such as lower interest rates. Isn't that what you want to accomplish? Sometimes it is more important to focus your efforts on one task as opposed to many.

    Thank you,

    Rob

    Follow me on Twitter and Facebook for tips on getting out of debt!

  • Thanks for stepping in and clearing things up Taylor.  As of this month I have been in the program for 3 years and 1 month. 

     It is true that my credit score plunged from enrolling in debt consolidation and in some ways that has negatively affected my life in that I have not been able to obtain a vehicle lease or finance.  However, that said, I am so happy to be enrolled in this program because of the following reasons:

    1- I no longer have to stress about remembering to pay minimum payments on multiple cards at random times during each month at ridiculously high interest rates.  As it stands now all of my interest rates are no higher than 10% and more commonly between 6% and 4%, only possible due to Care One.

    2- Enrolling in the program and seeing how much debt I accrued and the damage it all did to my credit has taught me an incredible lesson and I now live my life well within my means.  Only spending on things I have cash to back up.

    3- The end of this nightmare is NEAR!!! Already my credit is slowly beginning to rise after plummeting almost 300 points.  And I could not have reached this point trying to pay this off on my own.

     Like I said, while I am sad that my credit score has dropped, had I not joined Care One my credit would be much worse and it would take me the rest of my natural life to pay down my debt with much additional stress.

     I live my life knowing that my payments are being made on time every month.  I cant even begin to imagine how life would have been had I not enrolled.

    The benefits of debt consolidation (especially if you have upwards of $10,000 of debt) far outweigh the downsides.  It is very frustrating  that the credit bureau does not view people's being responsible and taking control of their mistakes as an incentive not to lower your credit score, but DON'T BE DISCOURAGED!!! This program will add years to your life and help you learn the lessons I mention above and maybe more.

    Thanks! 

     Michelle

     

  • Hi Connie,

    It depends, but for me, it helped me a great deal and is continuing to help my credit score.  I had over $40K in credit card debt from a bad marriage - so I had a LOT to overcome.  I'm close to my first full year and my credit score is going up a few points every few months and it jumped about 40 points last month.  I think it has to do with your record, mostly.  I took a hit at first but it's slowly coming back up.

     The credit cards are technically closed as you add them to the DMP - so technically they are closed the moment you add them to the program, but keep an eye on your balances and when their paid off.  I personally plan to call them directly to make sure all accounts are settled and the account is truly closed with a zero balance.

    Good luck with everything - good for you for taking control of your credit "stuff"!!

    ~ Tausha

    ~*~*~*~*~*~*~*~*~*~*~*~*~
    Joined CareOne 06/2008

  • Seems like everyone has a different answer to this question. I enrolled in the program a little over 2 years ago and started out with nearly $16,000 of credit card dept. I'm happy to say that today I am under $5,000 and my credit score has dramatically improved. I just checked it two days ago and it is above 700, which is very good! A few months ago one of my cards was paid off through the program. Upon the creditor receiving final payment, I received a letter from the creditor stating they had received my final payment from the program and my account was NOW re-opened with the interest rate back to where it was when I first got the credit card. I'm about a year away from completing the program but with my expected tax return plus savings, I actually might be able to pay off my dept completely within 2 months. I have had a very positive experience through this program. Perhaps it varies from person to person depending on the situation, who knows. Good luck to you.

    - Sebastian

  • Everybody situation will be different in the DMP for Careone. I started in late 2006 because I had my moms home morgage under my name (because she didnt have good credit at that time) and the payments skyrocketed within a couple of months of signing (from $550 in May 2004 to almost $1000 that November - December). In July 2005 I filled Ch. 13 and that didnt stop the foreclousre (which happened May 2006). So my credit was wacked off before I joined. And now my credit score is back to what it was before I did the Ch 13.

    In my opinon, whether you pay off your debt through Careone, on your own or not at all, your score may or may not be affected. Also check your scores every month and record it every time so you can see for yourself.

  • debt management companies usually don't report to credit reporting agencys the credit card comapnies do. You should really look for a NON- Profit agency this one charges way to much I was enrolled here they were chargign me 50.00 a month I switched to some one else a not for profit agency  its 15.00  a month. 35.00 more a month I can pay someone else with.
  • I don't think that Care One charges too much.  I pay only $20 a month and I have about $50k in credit card debt on many accounts on here.  I think for that extra $20 a month for them easing my mind isn't too much to pay.  I make one payment and don't even have to remember to pay it, it comes out automatically.  Care One is the best thing that I have ever done.  If anyone is having any doubts DON'T!!!  This is a GREAT program.
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