When searching for a credit counseling agency, it is essential to pick a company that truly works in your favour and is not after making its commissions from you. The Federal Trade Commission (FTC), IRS and other non-profit consumer protection companies have compiled a list of tips that consumers can use to find good credit counseling firms that will represent your case. Here are some of the tips:
- Check for credit counseling firms that are registered with the National Foundation for Credit Counseling (www.nfcc.org)
- Check with the Better Business Bureau of the company's address, applicable US states it is permitted to operate in, any complaints outstanding against the company and if it has good credibility on the BBB website.
- You should avoid any counseling agencies that have several complaints at the BBB or at an attorney general's office. However, even if there are no complaints, do not assume the company is good, sometimes companies change their names to complaints do not show up under their name. The best way to see if a company has changed its name is to see two different company names with the same address, and one of them has many complaints while the other has none. Also note the fact that 0 complaints does not mean the credit counseling firm is good, it could also mean that there are no people that have taken the time to register the complaint, and many people could be victimized before complaints show up.
- If a counseling agency claims to be non-profit, check with the IRS website.
- Choose a counseling agency preferably in your community or near your house so you can personally visit the premise and meet the credit counselors before signing up.
- Look for counseling companies that offer a variety of debt services including credit counseling, financial education, debt management plans, bankruptcy counseling, financial planning, etc.
- Be sure to ask about all fees and costs of the credit counseling firm. Make sure you get a quote in writing and inquire about any account set up fees, monthly fees, any percentages charged based on your debts or reduction of your debts, or other hidden fees. Also inquire if they have a fee sliding scale.
- Get a copy of all documents before you sign them and take them home and read over. If you have any questions or doubts, be sure to clarify them before you get in to the agreement.
- Make sure all your information submitted to the counseling agency will remain private and not sold off to the public.
- Ask how their employees are paid. If employees are paid based on how many customers they sign up for debt management or credit counseling plans, then it is best to take your business elsewhere because that firm has more commissions in mind and less of your interests.
- Inquire how credit counseling services will impact your score. Some creditors will report your participation in a debt management plan or a credit counseling course to the 3 major credit bureaus, which will show on your credit report. Ask the firm how your credit score will be impacted.
- To protect yourself from embezzlement, ask who handles the money you pay and how it is handled. For instance, the company should have money you pay towards your creditors in a separate account from the fees you pay for credit counseling services; they should absolutely not be mixed together. Ideally, the money you pay towards your creditors should be put in a trust account which means the credit counseling firm cannot use the money for paying anything else but to creditors. Also, if the money is deposited in a bank, make sure the bank is FDIC insured to protect your deposits from bank failures.
- Also, ask if the credit counseling firm has liability insurance to protect you from embezzlement or fraud conducted by employees on your money. Ask for a written proof of coverage and tell them to forward you a copy.
- Check for credit counseling firms that are registered with the National Foundation for Credit Counseling (www.nfcc.org)
- Check with the Better Business Bureau of the company's address, applicable US states it is permitted to operate in, any complaints outstanding against the company and if it has good credibility on the BBB website.
- You should avoid any counseling agencies that have several complaints at the BBB or at an attorney general's office. However, even if there are no complaints, do not assume the company is good, sometimes companies change their names to complaints do not show up under their name. The best way to see if a company has changed its name is to see two different company names with the same address, and one of them has many complaints while the other has none. Also note the fact that 0 complaints does not mean the credit counseling firm is good, it could also mean that there are no people that have taken the time to register the complaint, and many people could be victimized before complaints show up.
- If a counseling agency claims to be non-profit, check with the IRS website.
- Choose a counseling agency preferably in your community or near your house so you can personally visit the premise and meet the credit counselors before signing up.
- Look for counseling companies that offer a variety of debt services including credit counseling, financial education, debt management plans, bankruptcy counseling, financial planning, etc.
- Be sure to ask about all fees and costs of the credit counseling firm. Make sure you get a quote in writing and inquire about any account set up fees, monthly fees, any percentages charged based on your debts or reduction of your debts, or other hidden fees. Also inquire if they have a fee sliding scale.
- Get a copy of all documents before you sign them and take them home and read over. If you have any questions or doubts, be sure to clarify them before you get in to the agreement.
- Make sure all your information submitted to the counseling agency will remain private and not sold off to the public.
- Ask how their employees are paid. If employees are paid based on how many customers they sign up for debt management or credit counseling plans, then it is best to take your business elsewhere because that firm has more commissions in mind and less of your interests.
- Inquire how credit counseling services will impact your score. Some creditors will report your participation in a debt management plan or a credit counseling course to the 3 major credit bureaus, which will show on your credit report. Ask the firm how your credit score will be impacted.
- To protect yourself from embezzlement, ask who handles the money you pay and how it is handled. For instance, the company should have money you pay towards your creditors in a separate account from the fees you pay for credit counseling services; they should absolutely not be mixed together. Ideally, the money you pay towards your creditors should be put in a trust account which means the credit counseling firm cannot use the money for paying anything else but to creditors. Also, if the money is deposited in a bank, make sure the bank is FDIC insured to protect your deposits from bank failures.
- Also, ask if the credit counseling firm has liability insurance to protect you from embezzlement or fraud conducted by employees on your money. Ask for a written proof of coverage and tell them to forward you a copy.
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