Choosing the right credit counselor can make a huge difference in your debt consolidation experience. Reputable credit counseling agencies are able to negotiate lower interest rates and repayment plans. However, others charge big upfront fees, disconnected their phones and then disappear.
If you are considering going with a credit counseling service, be aware of the possible problems. Many of these agencies focus their activities on making a profit and not looking out for your best interests. For this reason, only work with an agency that has a good reputation with a long list of satisfied clients.
What to Look for In a Credit Counselor
When shopping around for a consumer credit counseling service, investigate the company or service carefully and use the following guideline for your evaluation before signing up:
- Have list of satisfied clients. The agencies should have testimonials from satisfied clients. Ask the company for referrals from people who’ve used them. Also, check with the Better Business Bureau in their area.
- Posses a license to work in your state. The agencies must be licensed to run in your state before they can work with you.
- Tell you their fees up front. Credit counseling agencies do charge fees, but they are usually taken out of the creditors’ money. Reputable agencies usually tell you about the costs of their services up front.
- Have qualified credit counselors. Their counselors should be recognized as a legitimate practitioner of this service through accreditation or certification by an outside body, and have extensive education in finance.
- Have good track record with creditors. The company should be willing to work with all creditors, pay them on time and tell you how they pay them each month. The agencies should want to work with all creditors and pay off all of your debt on time according to an agreed amount each month.
- Don’t push you to enroll in a debt management program. Not everyone needs a debt management plan. At times, all you need is someone to help you sort out all of your creditors and make a plan.
- They are insured. The agency is bonded or insured, so you are protected against the agency closing down.
Finding a Reputable Debt Counseling Agency
As with other purchases, be aware of some counseling services that make magical promises. If it sounds too good to be true usually it does. No company can magically settle your debts for little or no money, without hurting your credit rating, or make things on your credit report disappear.
To make sure that the credit counselor meets certain standards for quality, it is best to select a credit counseling agency which belongs to a nationally accredited institution, the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA).
Overall, paying off debt and fixing credit score aren’t something that you can do overnight; it takes your time, planning, and persistence. So, make sure you only work with a credit counselor that can meet all the requirements.