Choosing a Credit Counselor

Choosing a Credit CounselorWhen you find yourself in a bad credit situation it is easy to find hope in credit counseling agencies. You feel safe when someone says that they are a “non-profit organization.” But often, those that are offering help are only helping themselves.

Federal and state regulators are warning consumers that some credit counseling agencies are not what they seem. They may actually be using a non-profit status to avoid consumer protection laws. This gives them the ability to advantage of you, the trusting consumer.

What makes the agency non-profit? All they have to do is provide free education and counseling services. But many agencies are using these as a way to hustle clients into debt-management plans, which pay off big time.

With most debt-management plans, the client pays the agency a certain amount of money each month. The agency then pays the client’s bills. The agency negotiates lower interest rates and the waiving of fees with the client’s credit cards and loan companies. The credit card companies will usually give the agency a kickback, a percentage of the amount repaid.

Many experts say that clients are often pressured into the plans, even if they don’t need them. Some agencies don’t pay the bills on time, and you are the one who suffers.

Even the IRS has stiffened its review of agencies seeking non-profit status.

There are legitimate credit counseling agencies out there that can help you with your financial problems. You just have to shop around and do your homework when choosing an agency.

Talk and visit several agencies before selecting one. Don’t let the non-profit label fool you into thinking that a certain agency is better than the others. Non-profit status doesn’t differentiate the good from the bad, you must do that yourself.

Watch out for agencies that want “voluntary” contributions and high monthly service charges. If you are having financial problems, chances are that you can’t afford to pay high fees. Before you sign up for a debt management plan, request a written statement of all agency fees.

If an agency says that they can get you out of debt quickly or slash all of your interest rates, don’t believe it. First, getting out of debt takes time. You are simply looking for a plan that will get you there a little faster – but it still takes time.

Secondly, interest rates are determined by your credit card companies, not the agency. Many creditors won’t lower your rates. Some will. The agency has no idea of knowing what the future holds.

Check with your creditors to make sure that they are willing to work with the agency you choose. Once you have started a payment plan, make sure that your creditors are receiving their payments on time. If they don’t, it’s your problem.

Ask around for a reputable agency. Check with the Better Business Bureau and your state’s attorney generals office to see if there are any complaints on file. Ask the agency if they are a member of the Association of Independent Credit Counseling Agencies or the National Foundation for Credit Counseling – two well-known groups that have standards and fee limitations.

Finding a Credit Counseling Agency

Finding a Debt Counseling AgencyAlthough you try your best to keep our finances under control and pay our bills on time, there are times when you find yourself in unmanageable debt. If you’re experiencing slow or no payments on your credit cards, student loans, or car payments, credit counseling might be the answer you’re looking for.

A credit counseling agency can help by finding ways to reduce and manage your debt. They do this by contacting each of your creditors to negotiate new repayment terms. Credit counselors will also sit with you to review your budget and lifestyle to see if they can help by improving your spending habits and money management skills.

Although there are many decent credit counseling agencies out there, scams and illegitimate companies do exist. You should avoid companies that claim to erase your debts or repair your credit in a short amount of time. It takes time to get credit card and other debts under control and repairing your credit can take several months to a few years. Watch out for agencies that charge high up-front fees.

Your best bet is to find a not-for-profit credit counseling agency or an agency that is accredited by a third party. Those agencies with accreditation must follow moral rules and quality standards.

Conduct a search online or use your phone book to find a credit counselor. Don’t be afraid to ask questions about fees, accreditation, or other concerns you may have.

Credit counseling agencies have certain criteria you must meet before you may enlist their help. Your debts must be at least a certain dollar amount, and other conditions may apply. The credit counselor will ask you a few questions to make sure that you qualify for their services.

Your Credit Report

Some individuals are concerned about their credit reports and what credit counseling can do to change it. Sometimes, your creditor may put a negative remark on your credit report for using the services of a credit counseling agency. This is because the agency will negotiate repayment terms, meaning that you haven’t kept your obligation to pay the amount in full, or with previously set interest rates.

However, this may be better missing payments or turning in late payments. Creditors report to credit agencies to mark these incidents, thus reducing your credit score. In the long run, it is best to get debt under control and pay them off. After that, you can work on slowly rebuilding your credit score.

What Happens After Using the Service of a Credit Counselor?

Your credit counseling agent will be able to help with personal finance education so you do not get into a sticky situation in the future. They will do so by discouraging credit card use and will show you ways to use credit wisely to rebuild your credit. Credit counseling agencies may also require you to cut up your credit cards to avoid such circumstances. Whichever solution you opt for, remember that a credit counselor has your best interest at heart.

Debt Counseling

Debts are becoming a major issue around the world and US is no different to the rest of the world. Debts over the past few years have created havoc if we count the number of people getting severely affected by it. So it is natural that people are looking for solutions to their debts problems.

The first step towards the solution begins with the proper knowledge of a given topic and for problems relating to debts the first step towards their solutions would be to get totally acquainted with the subject and that in this case means taking debt counseling.

Debt counseling is a method where by the experts on the topics of debts and other related subjects provide insights to the people who can use them to their benefits. This is a great help as this technique helps eliminate the debt related issues from the start and what does the saying say “good start means half the battle”. Here is a preview of what might people get when they seek debt counseling. Debt counseling basically involves techniques which people should follow so that their debts do not get out of hand. A few well known techniques of debt counseling are:

Debt consolidation - it is a technique whereby people who are in debts from more than one creditor take another loan to settle their debts and in turn try to reduce or eliminate their debts. This process may involve a few steps. Steps such as:

• Making budgets – this process would involve the borrower to make budgets to keep the expenses in check.

• Follow budgets – the budgets are useful only when they are followed properly and to the point where they give out results, not just follow them at the start and then desert them.

• Spending carefully - the process would require the borrowers to spend carefully and keep their expenses down so that there is no problem in paying of debts.

Apart from these, there are other methods of debt counseling that a person can follow to reduce their debts.

People who are looking for debt counseling can get more updated information from any of these debt counseling services.

• Citizen’s advice bureau (CAB)

• National debtline

• Insolvency helpline

These debt counseling services can provide more insightful information depending upon the individuals profile and his credit ratings. Or else, the borrower can go online and interact with the experts on his case. This will surely help him in his fight against debts.