What You Should Know Before Hiring a Credit Counseling Agency

“Credit counseling can be a financial lifesaver when it’s done right." Consumer Reports

There are literally hundreds of companies in the credit counseling and debt management services industry, both private businesses and registered non-profit agencies. AAA Fair Credit Foundation (FCF) advises consumers to exercise caution when seeking credit counseling and debt management relief. In addition to checking a credit counseling or debt management organization's credibility rating with the Better Business Bureau, FCF advises consumers to conduct due dilligence on such organizations by asking the following questions before entrusting them with their finances:

You might consider contacting a credit counselor if:

• You are having difficulty paying multiple forms of debt, such as credit cards, home mortgages, or auto loans
• You have already spoken with your credit card issuer without an effective resolution to your problems
• You can't pay the minimum amounts due on your credit cards or other bills
• You're consistently late paying one or more of your regular bills

If you decide to seek credit counseling, it is advisable to seek an accredited non-profit credit counseling agency, rather than a for-profit debt relief company.

By doing so, you can be confident that the agency employs the best business practices possible to ensure your funds are safe and the agency's mission is focused on you — the consumer.

Accredited agencies must adhere to the following policies:

• Be recognized as non-profit by the IRS
• Have all the proper licenses
• Audit their operating and trust accounts annually
• Provide reviews of their consumers' income and debts, along with written plans for reducing and eliminating that debt
• Disperse the proper payments to creditors at the proper times
• Provide their clients with written statements at certain intervals
• Offer various educational programs and other ways to help consumers overcome their debt

Any company that makes these statements may be unreliable:

• We can remove your debt
• Pay us and we'll pay your bills
• Pay us a percentage of the bills we get rid of
• No company sues over unpaid bills
• We can get bad credit taken off your credit history
• Use our system and you'll avoid bankruptcy
• Don't talk to your creditors anymore

Questions to ask before hiring a credit counseling or debt management company:

• Is this agency a non-profit organization?
• Will I be informed of any fees associated with the services being offered?
• Are agency services private and confidential?
• Will they devise a plan tailored to fit my needs?
• Are the counselors independently certified?
• Is budget and credit education opportunities offered?
• Will my funds be protected?
• Is the agency licensed, bonded and accredited?
• What is the company's Better Business Bureau rating?

AAA Fair Credit Foundation is an award-winning IRS registered 501(c)(3) non-profit organization. FCF is ISO 9001:2000 accredited and a a member of the American Association of Debt Management Organizations (AADMO). FCF employs independently Certified Personal Finance Counselors and maintains an A+ rating with the Better Business Bureau. FCF conducts audits of their operating and trust accounts annually by a third-party Certified Public Accounting Firm. FCF offers counseling in-person, by phone at 1-800-351-4195, or online at www.faircredit.org.