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NATIONAL STUDY CONFIRMS THAT CONSUMER CREDIT USAGE AND PAYMENT BEHAVIOR DRAMATICALLY IMPROVES AFTER COUNSELING
August 8, 2002, Farmington Hills, Mich. - A national study recently released by Georgetown University found that consumers who received credit counseling significantly improved their credit score and payment behavior, relative to consumers who had similar credit risk profiles but did not receive counseling.
The study concluded that credit counseling led to significant improvements in credit scores, fewer late payments, lower credit card balances, and less frequent use of credit lines.
GreenPath Debt Solutions, a non-profit credit counseling agency with 40 offices in Michigan, New York, Wisconsin, Illinois and Arizona, was one of five credit counseling organizations that participated in the study. Each of the studied consumers received a comprehensive budget review and a written action plan customized to the consumer's budget.
The study found startling disparities between consumers who did not receive counseling as compared with those who did:
· They were 38 percent less likely to suffer an account charge off or file for bankruptcy.
· They posted an average of 11 fewer delinquencies in the last year of the observation period.
· Their credit scores increased an average of 36 points more than the comparison group.
· They lowered the amount of non-mortgage debt by an average of $14,400 more than the comparison group.
"With credit card debt now averaging $8,562 per household, there is an obvious need for financial education and credit counseling," said Jane McNamara, president and CEO of GreenPath, Inc. "It is important that consumers who are overextended financially understand that the right kind of help is available through legitimate organizations such as GreenPath Debt Solutions."
According to the Federal Reserve, outstanding non-secured debt rose to $1.65 trillion and consumer bankruptcy increased to 1.5 million in 2001.
Ten different measures of borrower behavior subsequent to counseling were examined over a three year period, including summary measures of creditworthiness, such as credit bureau scores; specific dimensions of credit usage, such as number of accounts with balances and total amount of debt; and payment performance. Credit bureau data provided an objective measure of credit performance for 14,000 clients.
The study was commissioned by the National Foundation for Credit Counseling (NFCC). Founded in 1951, the NFCC is the nation's largest and longest-serving national non-profit network providing premier consumer budget counseling, credit education and debt reduction services.
Established in 1961, GreenPath Debt Solutions is also known as Consumer Credit Counseling Service. The non-profit company provides customer-focused debt management solutions and financial education programs, enabling people to enjoy a better quality of life. GreenPath is fully accredited by the Council on Accreditation for Children and Family Services and is a member of the NFCC. For more information, visit GreenPath's web site at www.greenpath.com or call 800-550-1961.# # # | |