What is credit counseling?

Credit counseling explained

After a thorough review of their finances, some consumers may decide that they need help managing their debt or working with a budget. For these consumers, working with a credit counselor may be the best way to resolve these financial problems.

Some counselors offer online or telephone services, but many still offer in person services as well. There are many certified, legitimate credit card counseling services out there, but there are also services that unfortunately prey on people in financial trouble and/or charge very high fees to those already in financial distress.

When working with a credit counselor there is some basic research consumers should do before paying any money or sharing personal financial details.

Universities, credit unions, housing authorities, and military bases are examples of organizations that offer nonprofit credit counseling programs. Banks and consumer protection agencies an also offer recommendations of reputable services in a particular area.

Some questions to ask, or think about, before working with a credit counselor:

• Is the service or professional licensed?
• Is the service forthcoming with information about itself?
• Have complaints have been filed with agencies like state banking regulators, the Federal Trade Commission, or better business bureaus?
• How have complaints been resolved?
• Does the service or professional spend time with the consumer and review the financial situation before making any recommendations?
• Does the service work with the consumer’s creditors?
• Does the service or professional offer advice about budgeting and debt management?
• Does the service require payment up front?