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Credit Report & Credit Score; Credit Repair, Debt Management > Debt Management Help > 5 Important Questions to Consider Before Applying For a Credit Counselor

5 Important Questions to Consider Before Applying For a Credit Counselor

By Ruth Racey
Published: Wednesday, November 11th, 2009

Most credit counseling companies often only make things worse for their clients, but asking for a legitimate help might not harm you. If you are already in a situation where have become unable of meeting payments, borrowing money from one card to pay another, or in short,  just currently facing an extreme financial dilemma, then seeking credit counseling would be a good idea than to deal with bankruptcy.

Applying for credit counseling may not be a good option if you are currently up to date on bills and able to pay above minimums. Credit counseling itself would not affect your credit scores, but some reactions of your creditors might. For that reason, you must weigh the consequences carefully. Here are five crucial questions to ask before consulting a credit counseling company:

  1. Is the company accredited? Your counselor should be related to the Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling to assure you they are licensed and acknowledged.
  2. What do others say about it? You should consult at least two agencies: The state attorney’s office and the Better Business Bureau in your area. Ask them how many protests and complaints have been made against the company, if there are any.
  3. What does it say about itself and its services? You should be able to test their credibility with their promises. Do not believe companies who say they can settle all debts and leave your credit unharmed – such unrealistic promises only indicate their illegitimacy.
  4. How much would you pay? Recently, legitimate credit counselors have to raise their fees, but if they require payment of more than $50 for your plan, you might be paying too much.
  5. When and how will your lenders get paid? Since late or missed payments may ruin your credit score, make sure the credit counselor will mention how much you can pay monthly, and when those payments will arrive.

After conducting your investigation, you probably would think that signing up for a credit counselor would not work. If your agency failed to patch things up, they would most likely tell you to “explore other legal options,” in other words “inquire with a bankruptcy attorney.”

However, you may still want to pursue applying for a credit counselor to get additional information and options to help you decide your plan. Signing up for one is definitely important. However, if you cannot handle your debts anymore and you are in danger of facing bankruptcy, why not give it a try.

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