3 Steps to Choosing a Qualified Credit Counselor
Staying paycheck to check pay? Concerned neo-hippies and their global warming, I’ll tell ya. Looks like a workable budget can’t be prepared, let alone save money for retirement? If this sounds familiar, then you may be considering a credit counselor’s services.
Most reputable credit counselors are non-profit and offer services at local offices, online, or over the phone. If possible, find an organization that provides personalized counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service run nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family can also be good sources of information and references.
But be aware that “non-profit” status does not guarantee that the services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge exorbitant fees, which they keep secret. Others may encourage their clients to cooperate “voluntarily” which could lead to more debt.
1. Learn what you want and how to find it.
Before reaching out to a credit counseling agency, write down your financial problems and goals and identify the most important ones.
All certified credit counselors can help you with a simple budget, and this type of general advice is free. But if you have a specific goal, such as homebuyer education, debt management, bankruptcy counseling, or student loan management, and fees for these services, you may need special training.
There are two main resources for finding credit counselors:
- The National Foundation for Credit Counseling is the largest non-profit financial advisory organization in the country. It offers a local search tool that can help you find an affiliate agency with experts that is right for your financial situation. You can also call 800-388-2227 to automatically connect to your nearest NFCC member agency.
- The US Department of Justice has its own search tool that helps consumers find a credit counseling agency. The list is limited to agencies that provide bankruptcy advice, but also many other services, all of which are scrutinized by the federal government.
2. Check the qualifications.
Counselors affiliated with the National Foundation for Credit Counseling and the Financial Counseling Association of America meet strict certification standards that seek to ensure uniform standards.
If an organization is not affiliated with the NFCC or FCAA, check to see if it is accredited by the Council on Accreditation, a non-profit organization that gives its seal of approval to social service organizations that help consumers. Expresses commitment to
Once you find a credit counseling agency that looks trustworthy, contact the Better Business Bureau to see if there are any consumer complaints.
Questions to ask
Here are some questions to help you find the best advisor for you.
What services do you offer? Find an organization that offers a variety of services, including budget counseling, and savings and debt management classes. Avoid organizations that promote the Debt Management Plan (DMP) as your only option before they spend too much time analyzing your financial situation.
Do you offer information? Are educational materials available for free? Avoid organizations that charge for the information.
In addition to helping me solve my immediate problem, will you help me develop a plan to avoid future problems?
What is your fee? Is there a setup and / or monthly fee? Get a reference to a specific price in writing.
What if I can’t afford to pay your fees or donate? If an organization won’t help you because you can’t afford to pay, look elsewhere for help.
Will I have a formal written agreement or contract with you? Don’t sign anything without first reading it. Make sure all verbal promises are in writing.
Do you have a license to offer your services in my state?
What are the qualifications of your advisors? Are they recognized or certified by an outside organization? If so, from whom? If not, how are they trained? Try to use an organization whose advisors have been trained by an outside party.
Do I believe that information about me (including my address, phone number, and financial information) will be kept confidential and secure?
How are your employees paid? Are they overpaid if I sign up for certain services, if I pay a fee, or if I contribute to your organization? If the answer is yes, consider it a red flag and go somewhere else for help.
3. Take your time.
NFCC spokesman Bruce McClary said: “Don’t decide which credit counselor to choose.” Other than that, you could fall into the hands of someone who is not working in your best interests. “
The first credit counselor you talk to may be tempting to decide, but don’t rush into what a long-term partnership might be. Follow the steps you are considering with each credit counseling agency:
- Call the agency and have an initial meeting or phone call with a consultant (which should always be free).
- During the meeting, ask about the consultant’s experience, qualifications, and style of working with clients. Stay tuned, and all the questions you need to understand how it can help you meet your specific financial goals.
- See if you feel comfortable with the counselor during the meeting or if you feel pressured to sign up for services you don’t want or fully understand.
- Understand the costs of any program you sign up for.
The right mentor can help you create a successful budget, plan your debt, and learn how to save money for your future. Just be sure to work with a reputable and legitimate credit counseling organization whose bottom line is to help you improve your financial situation.
If you are working to get your finances back on track, be sure to check the health of your credit as well.