How to Filter Bad Credit Counseling Advice

Credit counseling advice is widely available today. With the average American housing nearly $4,500 in credit card debt, the advice is necessary in many cases. If you are considering looking for credit counseling services to help you manage debt better, you should know not all advice is equal. Use these tips to help find credit counselors that will provide you with the best ways to manage your debt.

Look for Non Profit Advisers

Many people are not aware there are non profit credit counseling services available. Of course, nonprofit does not mean the service will not cost you anything. Even nonprofit companies have to pay their employees and cover operating expenses. However, since the company cannot net a profit at the end of the year, the company will set much lower prices for the same services for profit companies charge high fees for. Non profit advisers also tend to be more accountable because they are under stricter regulation from federal and state authorities.

Watch Out for Fees

Regardless of where you go for your credit advice, you will have to pay fees for the service rendered. Since you are already in debt, you should aim for the lowest fees possible. Non profit advisers tend to have the lowest fees, but there are also inexpensive bankruptcy prevention services to explore that are for profit. In order to make sure you are getting a good deal, always ask about the fees for a service before you elect to use it.

For example, a company may offer a way to settle your debt for 30% less than you owe and lower your monthly payments by $300 each month. This sounds like a great deal, but did you ask what their fees are? If their fees are 20%, then you are actually only saving 10% through the settlement.

Check Your Credit

It is not enough to simply trust a credit counseling agency with something as important as your credit score. If the agency promises you will become a "low risk" borrower after you use their services, ask exactly what this means. Typically, a low risk borrower has a credit score of over 730. You should monitor your credit independently to assure this is achieved in the time line promised. It is particularly important to watch your credit score to make sure entering the credit counseling service will not harm your credit, which it can at times.

If it Sounds Too Good To Be True

The simplest advice to follow is this: if it sounds too good to be true, it probably is. Credit counseling services do offer bad credit borrowers a chance to turn around their debt profiles. They can assist you in understanding how your credit is calculated and help you take steps to improve your score. They cannot, however, completely turn around your situation in less than a year with no sacrifice on your end. These things take time, and you will have to do your part. Any credit counselor who says otherwise may be over-promising.


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