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Your guide to the best credit

Credit Counseling Services Checklist

There are credit counseling agencies that rescue people
from the deepest financial holes. There are also credit counseling agencies that
just shovel in more dirt. How do you tell them apart?

Signs of a Reliable Credit Counseling Agency

_Better Business Bureau Membership

The service’s website should have a BBB logo and a link to their record on
the Better Business Bureau website. Click through the link to check that there
are no unresolved complaints against them. Many people only think about the
Better Business Bureau after they’ve been cheated, but by then there’s not much
you can do. Working with a credit counseling agency that is a member of the
Better Business Bureau means that you can go to them to help mediate any dispute
you might have with the service provider.

_Accreditation

Reputable credit counseling services will be accredited by an independent
nonprofit, just as many schools are. One such accreditation body is the National
Institute for Financial Counseling Education.

_Fees

A good credit counseling agency will charge a small, reasonable monthly fee,
usually around $30. Some also charge a fee upfront, though this fee should be
reasonable (around $50 tops). It may be possible to get a hardship waiver of
these fees if you truly do not have the $30-50.

_Clear Application

The application must clearly say what the fees to be paid are, what the
services to be provided are, and in what timeframe all of this will be
provided.

_Reasonable Promises

Run far, far away from any organization that proposes to “wipe out” your debt
for you, rather than simply helping you to repay the debt. Short of your
creditors just deciding to forget about the debt (unlikely), there is no way to
erase debteven bankruptcy leaves a huge mark on your credit report for ten
years.

True, your car may not go missing from your driveway if you stop paying
unsecured debt (i.e., debt that is not “secured” with collateral, like most
credit cards, unlike most auto loans). But you are still legally obligated to
pay the debt, and the possibility of being taken to court will loom over you.
You will likely be unable to get even “bad credit” financing if you still have
debts in collectionsgood luck buying a car or house.

Not Necessarily Signs of a Reliable Agency

XX Nonprofit Status

Nonprofit status is essentially a tax designation, not a government
endorsement of a group’s mission. There are plenty of near-fraudulent credit
counseling agencies that are registered nonprofits.

XX Respectable Name

Any group can put words like “National,” “Alliance,” “Assistance,” and other
trust-inspiring words in their name. But a name is just a name. Make sure to
check any organization against the list above to make sure they’re reliable.
Also try searching for the group’s name on a search engine. Don’t just look for
a lack of negative reportsthat might just mean the group changed names
recently. Instead, look for positive reviews from real people, and preferably
mention on reputable third-party websites, such as news sites.

Ready to find a credit counseling agency? You’re in the right place: the web
is full of credit counseling agencies. Just use the checklist above, and you’ll
have no trouble separating the saints from the scams.

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