Choosing a Credit Counseling Agency One Step at a Time

You did it! If you’re reading this, it means you’ve taken the first step in the process of gaining control of your household finances. The credit counselors at our Consumer Credit Counseling Service (CCCS) agency commend you for your action and wish you success.

You may not know that there are differences among credit counseling agencies. If you’re in the process of selecting an agency to work with, we have put together some important tips. Please take a few moments to review this information, as it can truly mean the difference between success and failure.

Infomercials and pop-up Internet advertisements promising quick-fix solutions (often promising “debt repair” or the ability to “fix” your financial problems) rarely, if ever, represent respectable companies. The hallmarks of trustworthy agencies include:

1. a staff of certified credit counselors who’ll listen to your situation and offer tailored options and advice;
2. a range of educational materials to help you understand the financial aspects of your life;
3. customizable programs and services designed to put you on the path toward financial stability; and
4. words of praise from successful clients and credit industry experts.

In fact, it is quite common for former credit counseling clients to tell others about positive experiences with a credit agency. Many of our Consumer Credit Counseling Service (CCCS) agency’s clients are friends, relatives, and coworkers of those we’ve successfully helped in the past. You can read many of their testimonials right here on our web site.

The NFCC’s Importance in Your Decision

The National Foundation for Credit Counseling (NFCC), the most well known and respected national organization promoting financial responsibility for consumers, is another resource for locating a reputable credit counseling agency. To be a member, organizations like CCCS must be:

• a nonprofit organization as defined under IRS code 501(c)3;
• operating in compliance with all Federal and State laws for the profession;
• properly accredited by the Council on Accreditation; and
• in compliance with all NFCC quality standards.

The quality standards ensure, among other things, that the credit counselors you’ll be working with are certified by an NFCC-approved program. This means you can be sure you’re working with a professional who will connect you with the most appropriate tools, knowledge, resources, and programs to get your finances back on track. This advice will be based on a comprehensive interview covering your complete financial situation.

Furthermore, this certification, along with the agency’s membership in NFCC, means that the counselor you’re working with cannot receive a financial incentive based on the number of people he or she places in a debt management program.

If you ask an NFCC member how it is funded, the agency will explain that a portion of their funding comes from the creditors they work with. In a way, a credit counseling agency is a middle-man between you (a consumer interested in repaying debt) and your creditors. Since credit companies want to get repaid, they’re usually willing to voluntarily contribute up to 10% of all payments received back to the agency. (However, your credit card account is always credited with 100% of the payments you make.)

Finally, this membership means that your confidentiality is taken seriously. NFCC member companies will have a privacy policy that they’ll openly share and review with you.

Other Things You Should Think About

When you’re talking with a credit counseling agency, be sure to ask about the important items listed above. Here are some additional questions you should ask:

• What services do you offer? This is important because some agencies may offer fewer services or programs than others. Often, this indicates reduced chances that a program can be custom-tailored to match your individual needs.
• What’s the process? As mentioned above, a reputable credit counselor will conduct a comprehensive interview in order to analyze your situation. “Quality counseling is based on thoroughness,” according to the NFCC’s Quality Standards. If the counselor recommends a debt management plan without having conducted this interview, something’s wrong.
• How much will this cost? Many of the fees involved in debt management programs are regulated by state law. Such programs usually run up to $40 per month. If there’s a set-up fee, you may want to keep shopping around for a different agency. You should also know that a reputable agency will share this information with you prior to your sharing any personal information with them.
• What are the terms of the agreement? Before signing on with an agency, you’ll want to understand the terms and conditions. Your agreement should be in writing and should detail the services (including the counselor’s name, agency name, address, and contact information), the total costs (including payment details), the timing, expected results, and any guarantees.

If It Sounds Too Good to Be True…

Unfortunately, the world includes unscrupulous people, some of whom prey on those with financial troubles. They falsely and unrealistically promise easy relief from debt, extraordinarily reduced monthly payments (some claiming up to 50%), and the ability to somehow magically wipe negative information from your credit report. And naturally, they pressure you to sign-up right away before you’re able to do research and learn that they’re disreputable companies, likely with huge complaint files at the Better Business Bureau (BBB). Don’t fall for such scams! Instead, use the information here to make an informed decision.

Our Consumer Credit Counseling Service (CCCS) agency has offered quality budget and debt counseling education since 1980, having helped more than one million consumers to date. If you’re interviewing credit counseling agencies, or need assistance with household budgeting or debt management, please contact us anytime.