June 20, 2018
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Credit Counseling and the Basics...

Credit counseling is an active process of working with you, the consumer, and with your creditors.  In addition to gathering information about your current financial situation and spending habits, credit counselors work to establish an effective budget.  More than that, credit counseling agencies provide you with the keys to financial freedom - now that's the American Dream!

What Can This Service Do For You?

A consumer credit counseling representative can negotiate with your creditors to cut your interest rates, set up easier repayment terms, or reduce your monthly payment fees.  In some instances, a counselor may suggest that a client enroll in a debt repayment plan.

What is a Debt Repayment Plan?

While not everyone’s situation qualifies them for the debt repayment plan option, it is very helpful for those who do!  A debt repayment plan involves the credit counseling agency negotiating with creditors on behalf of the client's and distributing the client’s monthly payments to these creditors.  As the client, you would submit your payments directly to the credit counseling agency and they would in turn pay off your creditors.  Another key design of a debt repayment plan, is that the debts with the highest interest rates are paid off first to keep the total debt from further increasing.

Should Credit Counseling Be Your Next Step?

Carefully study your financial situation:

What steps have led you into debt?

Are you having difficulty controlling your spending habits?

Are finances and debt interfering with your relationships?


Are lenders denying you new lines of credit?

Are calls from creditors starting to upset you?


How Do I Find A Legitimate Agency?

Once you decide to seek out credit counseling services, be sure to locate a legitimate and trusted agency. Unfortunately, some “credit service agencies” are in fact scams that take advantage of their clients’ vulnerability.  Even some so-called non-profit agencies could fall into this category.  So be careful with your choice.  

1. See if the agency is a member of the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA).  

2. Check out the Better Business Bureau.

3. Contact your State Attorney General's Office regarding the agencies you are considering.  See if there have been any cases filed against them.  If so, find out how the issues were resolved.

4. Once you’ve researched and found a legitimate agency, inquire about their certifications, the programs they offer, and any and all fees involved.

Remember: An agency should not ask you to submit payment unless the services have already been provided.



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