Consumer Credit Counseling Agencies

Credit Counseling Services: What Can They Do For You?

So you’re inundated with credit card debt, medical bills, late on your mortgage, late on your car note or any combination of the above.  It’s stressful, to say the least, and you want to do what’s right and try to keep from torpedoing your credit score.  

The idea of turning to consumer credit counseling sounds better and better to you, but there are lots of things to consider before making that decision.

One of the first things that a credit counseling service will offer is something that you should be able to do yourself  (but often can’t), and that is to help in getting your finances under control.  That means taking a hard look at what your income is, how much you’re paying in bills, rent/mortgage, then sorting through your outlays for food, gas, entertainment, clothing, etc.  

A lot of people can’t be honest enough with themselves to make hard choices on that sort of thing, and that’s where the credit counseling service can be very helpful.  They can sit down with you and lay it all out in black and white, then help you figure out a disciplined budget for every week or month.

What Can Consumer Credit Counseling Do That I Can’t Do Myself?

Let’s say you’ve been laid off or had your hours cut.  Even after making those tough calls, you still can’t really keep up.  The consumer credit counseling folks can help you with a “negotiated settlement,” where they bargain with your creditors for lower interest rates, lowered principals and lower payments, according to what you can afford.  

This is something where you could go it alone, but in all honesty a rep from a credit counseling service is probably going to have more luck on this.

If you’re in more dire straits, they can set you up with a repayment plan that they administer themselves.  You make one monthly payment (rather than juggling a half-dozen bills and due dates), then they divvy it up among your creditors.

With the explosion in consumer debt and a slumping economy, the number of consumer credit counseling agencies has blossomed.  Unfortunately, not all credit counseling services are created equal.  Here’s a set of questions to ask when you’re considering consumer credit counseling:

• What’s your range of services?
• Do you provide free educational materials or seminars?
• Are there fees? What’s your fee structure?  Do I have to pay anything up front?
• What training/certifications do your counselors have?
• Who oversees the program?

These are all worthwhile questions to start things off.  In coming pages, we’ll put a finer point on the decision-making process, how consumer credit counseling can help you, what to look for, and what to stay away from.