How To Choose Best Consumer Credit Counselor

How To Choose Best Consumer Credit Counselor


If you have lost control of your finances and are unable to handle your debt problems on your own, you probably need credit counseling help. The good news is that debt help is widely available and easily accessible. The bad news is that you may get so overwhelmed with the wide array of choices you have that it may become difficult to choose the best consumer credit counselor.

There are hundreds of credit counseling agencies out there. It means you must first do a thorough research and review before you decide to opt for a particular service. Following are the seven most important factors that you have to work on in this regard.

Review The Types Of Services They Provide

The first thing you have to do is to find out detailed information on the different types of services the counselors in question offer. There can be a variety of possibilities with the term ‘credit counseling’. Some counselors only provide guidance and suggestions on how to manage things on your own while others may manage things on your behalf.

For example, you can find counselors who will negotiate with your creditors and convince them to reduce the debt burden and to make the repayment terms more affordable for you. In fact, depending upon the specific service you sign up for, the counselor may even consolidate your debts and take over making the monthly payments.

Therefore, while you are looking for the best consumer credit counselor, you must do a thorough review of the different types of services that different counselors provide and decide which services make financial sense for you.

Check If The Counselor Is A Legitimate One

There are certain legal requirements that credit counselors must meet. Unfortunately, there are several unscrupulous agencies in the market. Therefore, you are also strongly recommended to check their legitimacy.

For example, if you are looking for help with refinancing and loan modification under the ‘making home affordable’ program offered by the Federal government, you should contact only those counseling agencies that are legally approved for this service in your state.

Likewise, not all credit counselors can offer their services to people who are considering filing for bankruptcy. As per the bankruptcy laws, credit counseling is mandatory before filing the petition, but this counseling must be received from a government-approved counselor. Therefore, the best consumer credit counselor for you is the one who has the license to offer the types of services you need.

Are They Claiming To Be Associated With A Non-Profit Organization?

If an organization claims to be working as a non-profit one, they must be able to provide sufficient documents in support of their claim. For example, they must be registered with Section 501(c)(3) of the IRS code. You can contact the IRS, such as by giving them a call or just by visiting their official website, and check the name of the specific counseling agency if it is registered under that section.

Alternatively, you can ask the counselors directly to provide the copy of Form 990 of the agency they are associated with. If they say the details are confidential and that they cannot share it with you, it simply means they are not genuine ones because Form 990 is public information and must be provided to consumers when requested.

Check The Accreditation Of The Counseling Agency

The best consumer credit counselor often works with a counseling agency that is duly accredited from the National Foundation for Credit Counseling (NFCC), the Better Business Bureau (BBB) and other such independent, legitimate third party organizations.

Is The Counselor Duly Trained And Certified?

In order to confirm whether the counselors in question are well trained and duly certified, you should again look for certification from independent and legitimate third-party organizations. Many counseling agencies claim that they have themselves provided the training to their counselors and have also issued certification, which leaves a wide room for doubts; so, avoid counselors from such agencies.

Do not hesitate to ask the counselors to provide details about the kind of professional credentials they have. In general, the best consumer credit counselor is a certified public accountant, a licensed debt attorney or a certified financial planner.

Ask For References

In order to be on a safe side, you are also recommended to ask the counselors to provide some good references for the services they have provided to other consumers in past. In fact, it will be better to check the authenticity of the information provided by the counselors with the records maintained by the Better Business Bureau and other such organizations.

If possible, you can also consider contacting those consumers who the counselors claim to have provided services in past. The experiences shared by those previous clients will help you make an informed decision and you will be able to choose the best consumer credit counselor.

Ask Questions On How Your Credit Score Will Be Affected

It is very important for you to keep in mind that when you sign up for a credit counseling service, it can also affect your credit score negatively. Therefore, you are strongly recommended to ask questions about how their services are going to affect your credit ratings.

Reputable credit counselors always have a plan not just to protect your credit score but also to improve the same. However, you should avoid those who make claims that sound too good to be true. For example, you may come across a counselor who claims to remove all negative information from your credit report.

This is not possible; if the negative entries are correct, there is no legal way to remove the same. A genuine counselor will educate you on how to increase your credit score by implementing some financially healthy strategies.

Last, but not the least, the best consumer credit counselor is obviously the one that does not only charges reasonably, but also explains the actual cost of the service in detail. As per the laws, it is legally mandatory for them to include a ‘disclosure box’ in their serviuce agreement, where all types of fees and charges must be explained clearly.

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