Credit counselors (the good and the bad)

If you have bad credit and are considering working with a third party to help you improve your score or get your finances in better shape, you may be considering working with a credit counselor. There are some important things to think about before you choose a counselor and decide if it is really the best option for you.

 What is Credit Counseling?

 Credit counseling is a service that is provided for a fee or sometimes for free for qualified individuals, who have difficulty making payments on their debts, are going through bankruptcy, or have other financial difficulties. Often times, counseling can be provided by a certified counselor who is specially trained to help you manage your finances better, to find strategies for paying off debt, and to help you understand how to avoid bad financial situations in the future.

 What To Look for in a Credit Counseling Agency

 As in every industry, there are good and bad credit counseling service providers. However, some of the ones you want to avoid can be very dangerous, since they would potentially be dealing with some of your most important and financially sensitive information. The last thing you want when you are in need of repairing your credit is to work with a company or person who can do more harm than good. Even if a company is a non-profit organization, they could be involved in schemes to charge high prices for services that could be provided for free.

 When choosing a credit counseling agency, keep the following things in mind:

 Shop Around. Make certain you approach a number of different agencies before you settle on one. From this basic research, you may just get a feel for who is really interested in helping you repair your finances, and who is interested in taking advantage of your already tough situation.

  • What are their credentials? Ask if the agency is accredited by a third party or affiliated with a larger organization, such as the National Foundation for Credit Counseling, or if they are a government organization. You can generally be assured lower prices and fair treatment from groups that are governed by higher authorities.
  • Do they offer many solutions or a one-size-fits-all approach? Check to see what kinds of services are offered with the organization – do they offer comprehensive advice for a wide variety of financial problems, or do they seem to have a too-good-to-be-true solution that they seem to sell to every customer? If they do not take the time to understand your individual situation, or if you feel like they are suggesting solutions that you do not understand, walk away. You should never feel confused by working with a credit counselor.
  • To Pay or Not to Pay. Depending on your situation, you may need to expect to pay some kind of fee for services. Often times a consultation will be free, and a number of solutions and services will be offered to you at that time. However, if the fees seem unreasonable, or you cannot afford them, make certain you take time to think over your decision. If you are ever pressured into buying a service, such as being offered one-time discounts for signing on the dotted line the same day, chances are the organization does not have your best interests in mind. Of course, many reputable organizations will waive fees for individuals in dire need. However, some may need to charge some fees for certain services and more complex financial problems, but they should always be reasonable.
  • Are they community-oriented and educational? If an agency takes the time to offer free workshops and classes in your community that may also be a good sign they are truly care about people and want what is best for their clients.

 If you keep all these things in mind when searching for help with your finances, you can be fairly certain you will know how to choose a reputable organization with your best interests in mind. Also, if you happen to come across a group or person who seems to be taking advantage of people, make certain you report them to the Better Business Bureau or local legal authorities so they can be investigated if necessary.

Tuesday, January 19th, 2010 Credit

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