Back in February we signed on with a credit counseling agency. We have since come to regret this. Our credit score has dropped over 100 points and it has been an absolute nightmare. We are trying to get other things refinanced and you guessed it, no one will touch us because we are under credit counseling. Can anyone tell me what would happen if we cancelled our arrangement with the consumer credit agency? Meaning, would our credit score go back up, or are we doomed now?

I am sorry to hear this. I have found by reading stories from people with consumer credit problems that using a consumer credit counseling agency usually results in more problems that the ones that are solved. While I believe that they are a good resource for people that can’t repay the money borrowed due to living beyond their means, they might not be that useful to someone that fell behind because of an event beyond their control such as the loss of a job or illness.

Of the top of my head and of course keep in mind that I am not a consumer lender, using a consumer credit counseling service could have the following adverse effects:

1- It might take you longer to reestablish credit than declaring bankruptcy.
2- Depending how much in arrears you are with your lenders, it can make your credit report worse.
3- Not all original creditors might accept the plan.
4- You might end up extending the statute of limitations for certain debt.

Before trying credit counseling, I would try to contact the original creditor and try to arrange some sort of repayment schedule with them first.

Regarding your question about canceling the arrangement and the effect that this will have on your credit. Well, it depends in many things and I can not give you an answer. Instead of trying to advice on a topic that I do not know enough about, I would like to point you to my favorite resource for personal credit information http://www.creditboards.com/phpBB2/ that is a message board used by people that have a lot of experience about rebuilding credit. While I do not agree with all of their tactics and positions, they are very experienced and get results.

Another thing I would recommend is to get one of those services that allow for constant monitoring of your credit and let you pull a report frequently, that way you can monitor the effect of the things that you are going to need to do in order to improve it. I had privacyguard, which has a trial period {90 days for $1} and found it very useful. When you visit the link I provided, you can ask people there about this service or another comparable.

Hope this helps.