Can Consumer Credit Counseling Help Me?

Can Consumer Credit Counseling Help Me?
Consumer credit counseling refers to the process of consulting with someone who offers advice about how to deal with credit problems. Some counselors charge fees, and some offer their services as part of community outreach programs or not-for-profit organizations. Consumer credit counseling can be a great help in many instances. However, as with most items that involve money, credit counseling has a good side and a bad side.

What Do Fee-Based Credit Counselors Do?
Fee-based credit counselors offer their services to distressed individuals in return for compensation. This compensation can be in the form of an up-front cash fee, a commission on a debt-consolidation event (such as a loan or the opening of a debt-consolidation credit card). Part of the service offered by most fee-based credit counselors involves negotiating with creditors for relief. This relief can involve limiting telephone calls, limiting mail, negotiating lower APRs, negotiating lower payments, adjusting balances, and all related issues.

A Note About Predatory Fee-Based Credit Counselors
Some fee-based counselors have given the field of debt assistance a bad name by misrepresenting what they can do, how they do it, what it will cost, who will pay the bill, and what sort of damage their actions might do to your credit report. Ask the following question: “What do your services cost and who, specifically, will be paying them?” Get the answer in writing. Have the counselor sign the document.

Community Outreach Credit Counselors and Volunteers
Counselors in this category are usually volunteer professionals or professionals working for a charitable organization funded by grants, donations, and related sources. They almost never have a financial interest in the outcome of your situation. For this reason, they can offer objective advice based upon (usually) experience specific to the financial industry. Not-for-profit credit counselors will usually not negotiate on your behalf, but they will commonly coach you with respect to how to approach a credit-card issuer or a mortgage company about the thorny issue of asking for help.

How To Find Credit Counselors
Typing “Free Consumer Credit Counseling,” “Debt Assistance,” or Consumer Credit Help” into a search engine is likely to direct you to fee-based credit counselors because they invest money in attracting internet hits. The Federal Government has an arm called the Federal Trade Commission that is charged with protecting America’s consumers. Type “Credit Repair” into the search engine and start by educating yourself about what resources are available for free.

Initially Limit All Searches to .Org and .Gov Sites
Self education it the first step in the credit-counseling process. An ignorant consumer is a vulnerable consumer. After you have taken some time to familiarize yourself with your rights and responsibilities, seek out referrals to agencies or organization in your area. Use the telephone and the internet to seek out organizations that suits your needs. A list of useful credit-counseling links will follow in a separate post.

To apply for a credit card to consolidate your debt click here.

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