1Get Educated Through Credit Counseling

The biggest benefit of working with a credit counselor is the information they can give you. Nobody thinks they need any education because they know they have bills and they know those bills must be paid.

Legitimate Sources

Regardless of the issue you’re struggling with, good credit counselors can provide quality, legitimate sources that may be able to provide you with help.

One of the problems with getting financial help is the number of scams that are out there. A quality credit counseling agency gives you sources that you can trust.

Advice

They are also aware of the laws surround collections and what bills you should never get behind on. They can also offer advice on how to manage your credit more efficiently, setting up a realistic budget and a system to track your spending.

Unbiased Review

Many people who begin to experience financial difficulties get caught up in the struggle to make more money and they never take a realistic look at their finances, and their situation.

Working with a credit counselor can help you do this and can give you the clarity to recognize your next step.

Possible Reduce Payments

If the bulk of your debt is with credit card companies, the credit counseling service may actually be able to reduce your payments. (see below)

2What Do Credit Counselors Do?

The credit counselor will start by making a thorough review your information (income, expenses and debts, etc) that you provide to them.

After making a thorough review of your situation, they will provide advice on the best way for you to proceed. Credit counselors don’t tell you what you HAVE to do, but just make recommendations for you to consider.

Some of the measures that may be proposed to you include:

• Attending an educational program/class
• Streamline your budget to reduce non-essentials
• Contacting other sources for help with non-financial related situations
• Set up a repayment play (that you can afford) with your creditors
• Filing bankruptcy (this isn’t a popular option, but it can sometimes provide you with a “fresh start”)

3Repayment Plans Through Credit Counseling

Working with a credit counselor gives you access to many different options related to credit card debt. These organizations have agreements in place with most credit card companies that allow them to offer you dramatically reduced interest rates.

In many cases, these lower rates allow you to have your credit cards completely paid off within 5 years. Frequently, this happens with a lower monthly payment than you are currently paying.

You will make your payment to the credit counseling service and they will forward those payments to your creditors.

4How to Find the Right Counselor or Credit Counseling Agency

This is the most critical step – it is imperative that you find a legitimate credit counseling service. This does NOT include debt settlement companies or any other organization that promises to be able to reduce your debt.

Your search should focus on finding a credit counselor who has a history of satisfied clients. It should be one that uses trained counselors to offer personalized services.

From an overall perspective, your choice of credit counselor or agency should have the capacity to offer training/education that will affect your financial behavior positively. You should also be furnished with the necessary tools essential in achieving financial security.

The best way to find a good credit counselor is through referrals from others who have used the service. The best counselors and agencies in the business tend to let their work speak on their behalf rather than relying on ‘loud’ advertising and promotion strategies to announce their presence.

Without a personal referral, you should do a great deal of research before choosing a credit counseling service to work with.

You should definitely consult the following and make sure the service you are considering are members of the following organizations:

• Association of Independent Consumer Credit Counseling Agencies
• National Foundation for Credit Counseling

Additional Research

Check with the BetterBusinessBureau.com to learn more about the reputation of the business. Your State’s Attorney office should also have information about the agency.

You should also do a basic internet search for “(agency name) reviews” and “(agency name) scam” to gain additional information about the reputation of the credit counseling agency.

Red Flags to Look For

• Use of the term “debt settlement”
• Negative ratings with the BBB
• Large up-front payments

5Questions You Should Ask

• Are you certified? (they should be able to prove this)
• Do you work on commission? (if so, you should avoid them)
• What services are provided?
• What is your privacy policy regarding my personal information?

When you find the credit counseling agency that meets your requirements, they should agree to a contract or formal written agreement. Don't compromise on this. If they are unwilling to do this, find another credit counselor.

The agreement that you settle on should be clear in describing the services to be provided and the fees payable for those services

The agreement should indicate the time frame to describe when results are expected and what guarantees are offered

Make sure the basic particulars like the date, counselor’s name and business name, location address and contact information are present