What are the qualifications of its credit counselors? Find out about what training or professional certifications the counselor has received.
How are your employees paid? Are the employees paid more if I sign up for certain services, if I pay a fee, or if I make a contribution to your organization? If the answer is yes, consider this a red flag and go elsewhere.
Searches are limited to 50 characters. Please do not share any personally identifiable information PII , including, but not limited to: your name, address, phone number, email address, Social Security number, account information, or any other information of a sensitive nature. Skip to main content. Debt Collection. How do I choose which credit counselor is right for me? Here are some questions to ask to help you find the best credit counseling service for you: What services do you offer?
Don't see what you're looking for? Browse related questions How do I choose which credit counselor is right for me? How do I find a credit counselor? What's the difference between a credit counselor and a debt settlement or debt relief company? For this reason, the services credit counseling agencies offer includes debt management plans, which are designed to help people get out of debt quickly and efficiently. If you're having difficulty meeting your expenses and are drowning in debt, a credit counseling agency is the place to go.
Certified credit counselors are trained in consumer law, budgeting and how to handle all kinds of credit issues. They won't judge you for the decisions you've made in the past, but will help you move forward so you're in a better position in the future.
The first step in the credit counseling process is booking a free, hour-long budget and debt counseling appointment.
You can find a credit counseling agency through several organizations: The National Foundation for Credit Counseling and the Financial Counseling Association of America are great places to start. Also, you should consult the U. Department of Justice website for a list of approved credit counselors by state. Once you pick an agency and start the process, you will usually be asked to download and sign the counseling agreement forms, as well as a worksheet to list your income, expenses, assets and liabilities.
Most agencies conduct appointments by phone, but some also offer online and in-person sessions. Your appointment will start with you giving a brief overview of your financial situation and what you hope to gain from the counseling process. With that in mind, your counselor will conduct a thorough review of your worksheet. If more money is going out than coming in, your counselor will work with you to figure out a way to close the gap. Together you will decide which expenses are essential and which can be reduced or even eliminated.
Other recommendations may include selling unnecessary assets or increasing your income by getting a new or second job. Regarding debt, your counselor will explain your rights and responsibilities and provide information on how to handle your creditors.
Based on what you expressed at the start of the appointment, your counselor will develop an action plan that directly addresses your goals. A debt management plan DMP may be one of your counselor's suggestions. It's designed for people who can just meet their essential expenses and minimum credit card payments.
With a DMP, you send one monthly payment to the credit counseling agency, which then distributes the money to your creditors. Credit card companies may agree to lower their interest rates for people on a DMP so more of the payment goes to the principal rather than finance charges.
If you've fallen behind on payments, your cards' higher penalty interest rates may have kicked in, which could make it more difficult to get out of debt. After one creditor is paid off, the payment remains the same and the rest receive a larger payment until all balances are brought down to zero.
With a DMP, you should be able to pay off your debt within three to five years. You can pay it off earlier if your situation improves, or stop any time you want.
Aside from counseling and debt management plans, credit counseling agencies also offer referrals to charities, nonprofits and government organizations , educational materials and financial workshops. Most provide pre- and post-bankruptcy counseling and credit report reviews. Some are certified by the Department of Housing and Urban Development to conduct housing counseling to first-time homebuyers and to homeowners who want to avoid foreclosure.
Credit counseling itself has no impact on your credit report since it is merely an informational appointment. If you enroll in the DMP, however, your credit scores may be affected. Some credit card companies notify the credit reporting bureaus that you are paying through a third-party service. The notice is not calculated into your credit scores.
Once you start making payments via the agency, your credit score can improve because you will establish a steady payment pattern. You also may benefit from credit counseling if you plan on starting a business or taking on a mortgage, or if you've just navigated an unexpected life event that impacted your finances, such as a job loss. Typically, people turn to a credit counselor when they need to know how to pay off their debt faster, consolidate their debt into one monthly payment, eliminate or recover late fees, negotiate lower interest rates and generally improve their money habits so they can work toward a better financial future.
The most reputable credit counseling organizations are nonprofits, and you can take advantage of their programs free of charge or at an affordable fixed rate. You won't pay high fees to meet with one, like you might with a financial advisor. To get started, search for an accredited credit counseling organization in your area on the FCAA website or by phone at You can also search on the NFCC website search by zip code at the bottom , or call at Here are some ways to know you've found a safe and reputable credit counseling organization:.
Once you've gathered a list of credible organizations you want to reach out to, make sure they are legitimate by checking them out with your state attorney general and state consumer protection agency.
You can also read your state's financial regulation laws, including consumer protection acts, to know your rights and learn more about the fee limits in your state. This information is usually found on the website for your state's financial commissioner or office of financial services. Credit counselors can help you understand your financial options when debt becomes overwhelming, and in some cases they can even help prevent foreclosure or bankruptcy.
Credit counseling is also helpful for major life transitions that require borrowing, such as home-buying or opening a business, or if you've recently experienced a financial emergency and you can no longer pay off your debt.
Most of the time, debt counselors and credit counselors are free and offer a wide array of resources including debt management programs. Once you get your debt under control, credit counselors can put you on track to pay off your debt, build your savings and begin to make a plan for your future. Skip Navigation. Follow Select. Our top picks of timely offers from our partners More details.
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