Working with a consumer credit counselor can often be a good idea, even if you aren’t having debt problems. These professionals can introduce you to better ways to manage your finances just the same.
Still, though, most people only think of credit counseling when trouble is brewing. In such instances, working with the right agency can make all the difference in terms of the success you achieve.
So, how do you go about finding the best consumer credit counseling agency?
What Credit Counselors Do
Before you can evaluate the potential efficacy of a credit counseling agency, it’s useful to have an idea of what they do. Credit counselors can help you lower interest rates and get fee reductions.
Having a professional at your side can reduce the stresses of being in debt as well. They can also help protect your credit score and get you an affordable payment plan.
Each of these attributes can help you get out of debt faster and easier.
Due Diligence is Critical
As good as all of those things can be, there are people out there looking to take advantage of people in trying situations. With that in mind, it’s a good idea to vet any potential credit counseling agency carefully.
Before you sign up with one, run its name by the National Foundation for Credit Counseling and/or the Association of Independent Consumer Credit Counseling Agencies. Checking with your local branch of the Better Business Bureau is a good idea too. These steps are key to finding the best consumer credit counseling agency for you.
Initial consultations should always be free. Financial education materials should be provided without charge too. Yes, even though most agencies are non-profit, there will ultimately be fees involved. You’ll also encounter an enrollment fee if you enter a debt management program, as well as monthly service fees. However, the laws of each state cap those fees to prevent them from being too high.
Questions to Ask
You’ll want concise answers to each of the following questions.
- Are you licensed in my state?
- Where do your counselors get training?
- Are you certified and by what entity?
- What services do you provide?
- What free information do you offer?
- How do I avoid experiencing recurring debt issues?
Any hesitancy to respond to these questions should be viewed with suspicion. Moreover, it’s a good idea to check with the office of the Attorney General in your state to see if the firm is (or has been) the subject of litigation.
Requests for payment or bank account information before answering your questions or providing background information should be looked upon as a warning sign. And, while debt management is a useful strategy, the firm is probably looking to rip you off if the counselor comes out of the gate pushing it before analyzing your situation to determine if it’s really required or even viable in your case.
Other Red Flags Include
Guarantees aren’t worth the air displaced when they’re spoken. Anyone assuring you that they can absolutely eradicate unsecured debt, help you pay them off for next to nothing, or that asks for a percentage of the savings you achieve, is not a legitimate operator.
There are no guarantees in credit counseling and fees are capped by states. Moreover, credit counselors cannot repair damaged credit, nor can they get debts paid off for less than what is owed.
On the other hand, a good agency can help you get better interest rates on loans, fee waivers, and more favorable repayment plans with lenders. These firms can also offer you solid advice for staying out of debt, once you’ve cleared it up.
As always though, the best rule of thumb to follow is if it sounds way too good to be real, it isn’t real. Do yourself a favor — keep looking.