Credit Repair Help: 5 Questions to Ask Credit Counselors

By Barbara Marquand
Mortgage Credit Problems Columnist

If you're on a first-name basis with a payday lender, then it's time to get financial help.

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You can enter your information on this page to get quotes for debt consolidation loans, but you might need to repair your credit before you can qualify. A good credit counselor helps you budget, work with creditors, create a savings plan, and get debt relief, whether you're struggling with credit card debt or an unaffordable bad credit mortgage.

But not all credit counselors have your interests at heart, the Federal Trade Commission warns. Some charge big upfront or hidden fees or pressure you to make voluntary contributions that drive you further into debt.

Credit Repair: Do Your Homework First

Know who you're dealing with when you seek help. Here are five questions to ask:

1. What services do you offer?

Look for agencies that offer free educational materials and a broad range of services, such as budget, savings and housing education, as well as debt management counseling, advises the Federal Trade Commission. A debt management plan is a worthwhile tool, but be wary of agencies that offer these plans as the only option.

2. What fees do you charge?

Agencies should be open about how much they charge. Fees should be reasonable, no more than about $50 for set up and $25 for monthly fees, and good agencies should waive them in cases of true hardship, says the National Foundation for Credit Counseling.

3. Are you accredited and affiliated with a national organization?

Look for agencies accredited by an independent third party and affiliated with a legitimate national organization, such as the National Foundation for Credit Counseling.

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4. Are you a non-profit organization?

This isn't a guarantee the agency is credible, but it's a step in the right direction, the National Foundation for Credit Counseling says. Some credit counseling agencies call themselves "non-profit" but are in business to generate fees for their for-profit affiliates.

5. How are counselors trained and compensated?

Look for an organization whose counselors are accredited or certified by an outside organization or are trained by a non-affiliated party, the Federal Trade Commission says. Go elsewhere if employees earn more if you sign up for certain services, pay higher fees, or contribute to the organization.

Getting credit counseling is a step toward financial rebound, but only if the agency is reputable. Get referrals from your banker, local consumer protection group, and check with the Better Business Bureau to make the agency has not been subject to complaints.


http://www.ftc.gov/ / http://www.nfcc.org/ 

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