How to choose a Reputable Credit Counselor

If you’ve finally admitted to yourself you need help managing your personal finances, your next step will be to find someone qualified to help. Problem is, there are a lot of people out there who’d love to line their pockets at your expense. With this in mind, it’s very useful to understand how to choose a reputable credit counselor.

What Is a Credit Counselor?

Simply put, credit counselors are money management experts. They help people create and review household budgets in order to develop a plan to eradicate debt. Many of these people work for non-profit agencies. Credit counselors can also enroll consumers in debt management plans (DMPs) in which they will actually pay creditors on your behalf with the money you provide for that purpose each month.

And now, you can see how easy it is for a crooked one to rip you off – right?

The Key Questions to Ask

According to the Federal Trade Commission, here’s what you need to ask before agreeing to sign with a credit counselor — if you want to protect yourself and your money.

  • What services do you offer? Look for an organization that offers a range of services, including budget counseling, and savings/debt management classes. Avoid organizations that push a DMP as your only option before they spend a significant amount of time analyzing your financial situation.
  • Do you provide free educational materials? Avoid organizations that charge for this.
  • What are your fees? How are they structured? Get a specific price quote in writing.
  • What if I can’t afford to pay? Look elsewhere If an organization won’t help you because you can’t afford to pay.
  • Is there a formal written agreement? Read everything before signing and ask for clarification of anything you’re having trouble understanding. Get all verbal promises in writing.
  • Are you licensed in my state?
  • What qualifies your counselors? Are they accredited or certified by an outside organization? If so, by whom? If not, how are they trained? Look for an organization whose counselors are trained by a non-affiliated party.
  • How are your employees paid? Are they paid more if I sign up for certain services, pay a fee, or make a contribution to your organization? Consider it a red flag if the answer is yes and go elsewhere for help.

You also want assurances your personally identifiable information (address, phone number, and financial data) will be kept confidential and to know how it will be secured.

Will a counselor help you develop a plan for avoiding problems in the future, in addition to helping you solve your immediate financial challenges? Keep in mind, developing solid money management skills for after the immediate issue is resolved is crucial to your ongoing stability. Any agency lacking this training should be avoided.

Furthermore, make sure the agency is bonded to protect your money in the event it runs into financial difficulties of its own.

Other Options

The good thing about credit counseling is it can help you get your finances back in hand with minimal damage to your credit history — if you’ve caught the situation early enough. Most other forms of debt relief cannot make this claim.

Working with a credit counselor can be a great first step toward making the most of your income and reducing your debts. But it’s not always the final destination; some people find, after meeting with a counselor, they need to pursue further strategies to take control of their finances.

This is why a lot of people decide to also work with debt relief companies. A viable option, it’s important to conduct due diligence here as well. Reading over information like Freedom Debt Relief reviews can provide some insights into the experiences of those who have enrolled before.

Either way, understanding how to choose a reputable credit counselor is critical to resolving your financial issues and getting your life back on track. Working with the right people can make all the difference in the world.

About the author

James Oliver

James is a tech-savvy journalist who specializes in consumer electronics. He holds a degree in Electrical Engineering and has a knack for dissecting gadgets to their core. Whether it's smartphones, wearables, or smart home devices, James has got it covered. In his free time, he enjoys mountain biking.