How to Choose a Credit Counselor

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Locating the appropriate consumer credit counseling service is a crucial step when you decide you need one.  This will seem a bit obvious but many crooked counseling services count on those who do not do their research.  This can result in consumers paying way more to the counseling service than is necessary.

Credit Counselors Are Not Created Equal

There are many criteria which a credit counseling service agency must meet before you hand over to them your credit information and write them a check for their fee.  The FTC and IRS have issued consumer alerts cautioning consumers when choosing a credit counseling agency.  Dishonest practices inside the credit counseling industry have led to regulations and criminal prosecution.

While several organizations provide worthy advice and education, consumers should remain wary of those agencies who pledge a quick repair in an atmosphere where the process is more of a marathon race than a fast sprint.  Consumers can help guard from misleading practices by understanding what criteria should be used to pick a legitimate counselor.

A certified counselor can many times help an individual devise a financial plan, figure out the entire amount of debt needing to be paid and help them arrive on a total monthly outlay which fits that financial plan.  The difference between doing this yourself and doing it through a credit counselor is that these agencies collect the money from you every month and disburse the funds to your creditors who may possibly have agreed to take a lesser interest rate and smaller payment.  For this kind of service individuals should in no way shell out more than $50 per month.

Doing Your Research

Before selecting a credit counseling company check with organizations whom you trust such as universities, credit unions, government agencies or a military base which can offer free of charge or low cost debt analysis.  If you go to work for a big firm an employee assistance program possibly will also offer this type of service.  Of course, these organizations don't generally offer debt management programs however they will provide a broad range of additional services as well as financial planning.

References From Friends

Problems associated with consumer debt and lower credit scores is a prevalent problem so do not believe that you don't know someone that has already used a credit counseling agency.  Although nearly all folks are reluctant to speak about monetary matters a recommendation from a friend you trust will provide you with a little peace of mind.

Non-Profit Services

While you're searching for a credit counseling company look for a nonprofit company that has been in business for several years.  Using a nonprofit company can help decrease the cost of credit counseling however it does not ensure the legitimacy of the company or the fairness of their fees.

Trade Association Membership

In the U.S. the company ought to be a current member of two large trade associations; The National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies.  Both of these trade associations require third party accreditation in support of their members. Although accreditation is a helpful sign it is not a guarantee of quality.

Licensing

Check with your state attorney general's office about the licensing requirements for credit counseling firms.  If your specific jurisdiction requires a license be positive the company you are looking into has a license.  Once you've completed a listing of possible companies look for complaints with the Better Business Bureau, your state attorney general's office or any other related regulatory authority in your state.  Doing your research up-front before you sign a contract can help guard you in the long run.

Before You Sign A Contract

Before making a final decision request information with references from the counseling agency you have chosen.  Reputable counseling services can furnish you free of charge information regarding the services they provide without requiring a fee or asking about your financial circumstances before hand.  If the firm wants an up-front fee and will not have a discussion with you regarding the services they provide then do not bother with them.  Look for an agency that has a extensive range of services and whose counselors are very well qualified and certified.  Also, previous to giving them your private information, ask about the security of the information you will be providing to them.

More Harm Than Good

Working with a credit counseling company to help deal with your debt, pay off your credit cards and increase your credit score is one option existing to debtors.  However, if the job is botched hiring the wrong counselor can in fact do more harm than good.  For example, if you are using a credit counseling company on a monthly basis to supervise your debt a dishonest agency can steal your money and ruin your credit rating even further.

Complete your research thoroughly when investigating a credit counseling service that you intend to hire and be certain that you are pleased and comfortable with the professionals with whom you are going to be working with.

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