Credit Counseling Agencies: The Real Deal

2007-03-08 10:33:40

( Financial )



More and more people are turning to credit counseling agencies to help them deal with their financial woes. While this may seem a good idea, there are still a lot of things that needs to be explained on the nature of their work. Note that not all credit counseling services are created equal; some are indeed of good reputation and can be an excellent partner in managing your debts while others are inefficient and do not deliver as promised, and quite a lot are flat out illegitimate. The following are some guidelines in choosing which credit counseling agencies to partner with.

Do Your Research

Know as much about the company as you can. Do some background checking. Get in touch with your state Attorney General and the Better Business Bureau and ask them if any complaints are filed against the agency you’re interested in. Check if they have the required licenses and independent third party accreditation. Opt for an agency with a solid reputation and proven track record.

Be Wary Of Hefty Fees

Most credit counseling agencies claim to be nonprofit, but it certainly does not mean free. However, reputable agencies will offer their services at low costs to you since they get their funding mostly from your creditors. If an agency tells you of an upfront fee that seems exorbitant, then this is a clear sign of things to come. You might even be charged without you knowing it. Some unscrupulous agencies may even deduct money from your monthly payments as donation without telling you. Before agreeing on anything, make sure you are clear about the payment terms. Verify that all your contributions will directly reach your creditors at the soonest possible time.

Opt For A Full Service Agency

Good credit counseling agencies offer a full array of services that are tailor fit and customized to your needs. Make sure that the agency you want to do business with provides for substantive counseling sessions and information support when you need them. Some services you should expect are budget-forming sessions, mortgage counseling, debt counseling, debt consolidation counseling, a debt consolidation program and training on better financial management. Ensure that these services are conducted by certified and qualified counselors. Think twice if they offer anything less.

Don’t Count On Big Promises

Some agencies make big promises that remain just that – promises. If their terms seem too good to be true, then they probably are. Be realistic. These agencies are not magicians that will make your debts disappear in an instant. Becoming debt-free takes time and sacrifices on your part. Pick an agency that offers a comprehensive and feasible plan on a viable time frame over an agency with big promises and not much else.


Trust is your biggest investment in a credit counseling service. Work only with the agency that you have complete trust on. If you are having doubts, then you are better off looking for a better choice.


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