Choosing a Credit Counselor

Not All Credit Counseling Companies Are Created Equal

There should be many criteria that a credit counseling agency must meet before you hand over your private credit information to them and write them a check for a big fee. The FTC and IRS have issued consumer alerts in the past cautioning the gullible public to be highly cautious when choosing a credit counseling agency. Unfortunately there have been dishonest practices inside the credit counseling industry that have led to several regulations and even some criminal prosecutions.

Of course even though there are many reputable organizations that provide worthy guidance and education, consumers should remain very wary of credit counseling services that pledge quick repairs with a situation where the process is slow, more like a marathon race rather than a fast sprint. Consumers can help protect themselves against misleading practices by understanding the proper criteria that should be used to pick a legitimate counselor.

A certified counselor can many times help an individual build a financial plan, calculate the entire amount of debt outstanding and arrive at a total monthly payment which will fit within the bounds of that carefully laid out and considered financial plan. The biggest difference between attempting to do this yourself and doing it with a credit counselor is that many of these credit counseling agencies are actually debt management companies that want to collect money from you every month and disburse these funds to your creditors. These creditors may possibly have agreed to take a lesser interest rate and smaller payment. For this kind of debt management service clients should not pay more than $50 per month.

Doing Your Research Is Key

Before making a final decision on a credit counseling firm check with organizations in your area whom you trust to give you straight information such as local universities, credit unions you belong to, government agencies or a military base who can offer debt analysis free of charge or at low cost. If you can get a job with a big firm they may have an employee assistance program that offers this type of assistance. These organizations probably will not offer a debt management program to you however they may be able to provide a broad range of additional services than just financial planning.

Getting Advice from Someone You Know With Experience

Problems related to consumer debt and bad credit terms due to low credit scores are prevalent problems so don't believe that you can't find someone that has already used a credit counseling agency with whom are acquainted. Even though just about everybody is hesitant to talk about financial problems they have had or are having a reference from someone you trust that has been through the process will provide you more peace of mind than going it alone.

Nonprofit Companies and Membership in Industry Associations

In your search for a credit counseling agency consider nonprofit companies with a track record of having been in business for many years. Hiring a nonprofit company can help to decrease the costs of credit counseling however it will not guarantee the legitimacy of the company or, for that matter, even the fairness of their fees. In the U.S. the firm you are considering needs to be a current member of two large industry trade associations; The National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies. Both of these industry trade associations require third-party accreditation of their members. Be aware however that accreditation is a helpful indication of integrity but it is in no way a warranty of quality.

Are Credit Counseling Firms Required To Have A License?

Always check with your state attorney general's office about licensing requirements for credit counseling firms doing business in your area. If your state or local jurisdiction requires a license be certain the company you are considering contracting with has a valid and currently issued license. Once you've compiled a list of the possible firms you are going to consider look for complaints filed with the Better Business Bureau, your state attorney general's office and other related regulatory authorities in your state. Doing your research upfront well before you decide to sign a contract can help protect you and your pocket book in the long run.

Before Signing A Contract

In advance of making the final decision make sure to get legitimate references from the counseling agency you have chosen. Also, genuine credit counseling services should supply free of charge detailed information regarding the services they are going to provide to you taking into consideration your specific financial circumstance without requiring fees paid upfront or asking for your private financial and identity data. If the firm demands an up-front fee and refuses to have a casual discussion with you regarding the services they can provide then don't trouble with them. Look for a company that offers an extensive range of services and that has well qualified, experienced and certified counselors. Also extremely important is to ask about the security of the private financial and identity information you provide to them.

Hiring the Wrong Credit Counselor

Working with a reputable credit counseling company to help handle your debt problems, pay off your credit cards and boost your credit score is a good option if you are having difficulties with debt and having trouble making monthly payments. However, if the job is botched hiring the wrong credit counselor can do significantly more harm than good. A nightmare example is using a dishonest credit counseling company to manage your debt then discovering they are stealing your money and ruining your credit even further.

Do yourself a favor and methodically complete your research. Investigate the service that you intend to work with and be certain that you have confidence in the professionals with whom you are going to trust your financial future to.

Author : Wayne Jennings

About the Author :

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