Which Credit Counseling Service Do I Choose?

After you make the decision to use a credit counseling agency to help solve your debt problems, you will quickly find that there are numerous ones in operation. How do you go about choosing the best one for you? How do you protect yourself from those that have poor reputations? Here are few ways to answer these questions:

Does the credit counseling agency have free education resources? The credit counseling agency you are considering should provide plenty of free information either in printed form or on their website. You should be able to find out everything you need to know. Another useful tool used by some credit counseling agencies is a member’s forum where actual clients post their comments and questions for others to see along with the response. A reputable credit counseling agency will encourage you to be as educated as possible in matters of personal finance.

If using their debt management services, make sure they use a contract and that you are given ample time to read their contract. This is for when you want to go one step beyond credit counseling and enroll in one of its debt management plans. They should show you their contract and list all fees clearly.

Is the credit counseling agency listed with another reputable agency? The National Foundation for Credit Counseling (www.nfcc.org) and the Better Business Bureau (www.bbb.org) are two good places to see if the credit counseling agency you are choosing is listed. Keep in mind that a listing of complaints for a particular credit counseling agency with the Better Business Bureau does not necessarily mean that it is one that should be avoided. You have to take a look to see if the company resolved the complaints. Understand that the credit counseling industry is one that operates in the context of people having serious financial problems. Not everyone is going to be happy as some set expectations too high or their situation is so bad they have to file for bankruptcy.

Does the credit counseling agency offer only a debt management plan? Obviously, the debt management plan offered by a credit counseling agency is the one that keeps them in business as the fees are higher. The fact that the credit counseling agency is a for-profit or non-profit agency is irrelevant. It needs to offer debt management programs to bring money in for paying counselors and operating the business itself. But if a debt management plan is the only service offered then you should be wary of the agency. It should also have credit counseling for people who are not too seriously in debt but want to reduce it.

Understand what type of debts the credit counseling agency will handle with their debt management plan. You should have prepared a list of your creditors and the type of debt along with the balances owed. You want to avoid getting in to a piecemeal debt solution because probably one of the main reasons you are seeking credit counseling is to get one-stop help.

Make sure you understand all the fees you will incur using the services of a credit counseling agency. The reason you are looking for credit counseling and debt management services is because you don’t have enough money to pay everyone the way they want it. It is quite possible that the fees of a credit counseling agency you are considering will only add too much financial burden on top of what you already have. Also be aware that some debt management plans will add fees to the overall creditor debt and your deposits over the repayment period will satisfy them. Just make sure the credit counseling agency discloses all of this up front.