I Signed Up With Money Management International and Now I Have Bad Credit. – Anna

“Dear Steve,

About six months ago I signed up for Money Management Internationals Debt Management Program. I pay about a thousand dollars a month and my debt will be paid off in 30 months. I recently saw my credit report and found that because of MMI there have been 12 late payments on my report since I signed up with them back in January.

Prior to my contract with them I only had one late payment. My fiance and I have been looking into buying our first home. Obviously, I am not going to be approved for a loan for a long time now. I spoke with a mortgage broker and he suggested that I seek legal advice against MMI, they have ruined my credit. My credit score is now in the 400’s which means it dropped well over 100 points.

What suggestions do you have for me?

Thank you so much for your time and advice,


Dear Anna,

While I can’t speak specifically about your situation, there are plenty of reasons why this can happen. Most of it surrounds timing issues and creditor inefficiency.

Often times people will run to a debt management program at the last minute when they feel they might not be able to keep current on this months payments. The process of enrolling in a debt management program can take a few days or weeks depending on the efficiency of the credit counseling company and the timeliness of statements, account information and first payment from the client.

Then when you enter a debt management program and the first payment is not received by the anticipated due date your creditors may indicate that payment is past due. Most creditors will reage, or show your account as being current, once you have made three consecutive on-time payments. I suspect the late payments you have observed are from more than one creditor.

Another problem that occurs is that creditors are quick to take the payment but sometimes slow to update their systems to reflect you are in a credit counseling program. This can cause timing and reaging issues as well at times.

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I don’t think this process of getting started and the late payments is what may hold you back from getting a loan in the near future. I suspect that you went into a credit counseling program because you were feeling financial pressure. in that case, your credit scores were damaged to begin with. By your own admission it is now in the 400 range and if it dropped as you said by 100 points, you went into the program in the 500 range. A score that is still below prime.

I think the best course of action at this point is to pay off the debt that you owe as quickly as you can. Once these accounts are satisfied and you have money for a down payment and you’ve rebuilt your financial life from where it is, I am confident you will qualify for a mortgage.

The irony here is that you’d probably get a house faster if you went bankrupt. I know, that sounds crazy, but follow along.

Right now your credit score is already in the toilet. Bankruptcy is not going to drive it down much further. In the 400 range there isn’t much further to fall anyway. If your debt was discharged you could spend the next 30 months rebuilding your credit and saving money for a down payment. If you stay in the credit counseling program you’ll make 30 months of payment and start saving for a down payment.

The choice is yours but rather than have a bunch of pent up anger over MMI, I’d suggest that you instead go and talk to a local bankruptcy attorney and learn the facts about bankruptcy. If you discover that bankruptcy makes more sense in your situation then you can just put this MMI issue aside and move on.

Give me an update in the

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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