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How to choose a good credit counseling agency

Renowned and reliable consumer credit counseling agencies help people to manage their debts through free financial analysis and budget counseling. They offer free credit counseling and arrange an affordable repayment plan for the debtors.

Check out the following sections which have been highlighted in the article:

3 Situations when consumers opt for credit counseling

Usually consumers get the credit counseling services under the following circumstances:

  • When they'e lagging behind their debt payments
  • When they're going to file bankruptcy (also known as bankruptcy credit counseling)
  • When they're facing mortgage debt related problems
  • How to choose a good credit counseling agency

    Check out the following tips to select a reputable credit counseling agency:

    1. Evaluate their services: A credit counselor is supposed to help you in budget planning. He should suggest you a comprehensive action plan for paying off your debts. Find out a consumer credit counseling agency which will offer free counseling sessions to you. If the credit counselor doesn't bother to check your financial reports, and claims that only a debt management plan will solve your problem, then he is not speaking the truth.

    2. Look at their accreditation: This tip will help you differentiate between good credit counseling and a bad one.

      Find out if a credit counseling agency has been accredited by the following organizations:
      • International Standards Organization (commonly known as ISO)
      • National Foundation for Credit Counseling (NFCC)
      • Council on Accreditation (COA).
      • Association of Independent Consumer Credit Counseling Agencies (AICCCA)
      You can visit the official websites of the above organizations to know about the accredited credit counseling companies in your state. Make sure you check the date of accreditation.

    3. Watch out for the unresolved complaints: Once you’ve shortlisted credit counseling agencies in your state, you should look for the unresolved complaints against them. You can get information about this from your State Attorney General. You can also visit the official website of Better Business Bureau (BBB) to know about the registered complaints against the agency. It is best to get the consumer credit counseling service from an agency which has less number of complaints against it.

      The old credit counseling agencies (which have been working with the consumers for several years) are likely to have complaints against them. Some or the other consumer may not be satisfied with the services offered by the counselors. Check whether or not the credit counseling agency has a short or long list of unresolved complaints against it. Avoid working with a newly established agency which has a long list of complaints against it.

    4. Know about the fee structure: Get the fee structure in writing. There is a valid reason for doing this. The credit counseling may claim that you have to pay $30 as monthly fee. However, it can charge a higher a fee later on. This will create misunderstanding and problems. Never agree to work with a credit counseling agency which charges excessively high fee. Your main goal will be to work with an agency which offers cheap credit counseling service to the consumers.

    5. Seek advice from your relatives: Debt is a worldwide problem. So, there is a great possibility that one of your friends or relatives has encountered a debt problem. There must be someone who has enrolled into the credit counseling program to discard his debts. This person can be your friend, family member or a relative. Request him/her to suggest a good credit counseling agency to you. Your friends or relatives can offer a wealth of information about the NFCC or AICCA approved credit counseling agencies.

    6. Dig out detailed information: You need to make a detailed research on the credit counseling agency. Find out if the agency has experienced and certified credit counselors. It is better to work with those counselors who have been certified by authorized agencies. You next task will be to find out how the employees are financially compensated. There are some credit counseling agencies which offer lucrative incentives to the counselors after they have persuaded consumers to enroll into a debt management program.

    7. Check out their privacy policy: You'll be revealing confidential information to the credit counseling agency. You’d have to show your pay stubs, credit card bills and other documents to the counselor during the financial counseling session. In an age where the identity-theft rate is rapidly increasing, you should be extra careful while dealing with professionals. Ask the credit counselor about the privacy policy of the credit counseling agency. Find out the steps he’ll take to keep your financial information safe.

      Sometimes, consumers run to the non-profit credit counseling agencies to save the debt reduction cost. They want to get free credit counseling services. If you do want to work with a non-profit credit counseling agency, make sure you do some homework. Check its non-profit status to be sure that you’re not working with a legitimate credit counseling agency. Find out if the non-profit credit counseling agency really charges a nominal fee.
How do I select a good credit counseling agency?...
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How do I select a good credit counseling agency?

to choose a good and reliable credit counseling agency, consider the following points:
1. It must have been in business for at least 5 years
2. Check online customer review to ensure it offers services as promised
3. It should not charge anything for initial counseling
4. Check BBB status to make sure that it ha good ratings
Above all, it's always to choose a credit counseling agency which your one of your friends/family members has recommended. By doing so, you can be rest assured that you'll get what you're looking for.

Sub: #1 posted on Sun, 04/29/2012 - 23:15

tiarajoseph11 tiarajoseph11

(Posts: 467 | Credits: )

By checking reviews, feedbacks and ratings. The BBB is a good source. You should look into Non-profit credit counselling options as well.

Sub: #2 posted on Sun, 04/29/2012 - 23:48

StevenDoyle StevenDoyle

(Posts: 199 | Credits: )

Find a local consumer credit councelling service in your area...they all non profit.

Sub: #3 posted on Mon, 04/30/2012 - 04:56

Moderators Cum Industry Expert
(Posts: 17319 | Credits: )

Not all consumer credit counseling service companies are created equal. There are different reasons to seek one out:
HUD housing counseling
Required pre and post bankruptcy credit counseling certificates
Reverse Mortgage counseling

The number one reason people seek out credit counseling is to enroll in a debt management plan.

When it comes to the debt management plan, all credit counseling companies are pretty much created equal. They have preset lower payment concessions and left over discretionary income guidelines from creditors who agree to participate in your repayment plan. There is not really any creativity or skill sets to the DMP.

As tiara mentioned, there are the standard ways to check out a company. What will set one established consumer credit counseling agency apart from another when it comes to enrolling in a debt management plan will be the little things:

Customer service
Value added educational resources
Online access for convenience

If you are seeking out nonprofit consumer credit counseling for the purpose of enrolling in a debt management plan, your priority should be making sure a DMP is right for you. The number one reason people do not complete a credit counseling repayment plan is due to the set payment being inflexible.

If you can afford a monthly payment of roughly 2% of your combined balances of debts enrolled in the plan, you are a good candidate. If you for any reason believe that the estimated 2% of balance monthly payment is a stretch and you have no savings or emergency cash in case of an unexpected expense - look at bankruptcy or settling debts instead.

If the estimated 2% reduced payment is a stretch and a credit counselor seems be over selling the DMP to you, you may not be talking to a good company, or may just be speaking to an over selling counselor.

Sub: #4 posted on Tue, 05/01/2012 - 05:53

MichaelBovee MichaelBovee
Moderators Cum Industry Expert
(Posts: 125 | Credits: )

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