A Credit Counseling Agency is a non-profit organization set up to counsel consumers on matters of money management, credit and debt resolution. Counselors working at these non-profit organizations look at your financial situation and give recommendations on how to return to a financially healthy status.
Pros
A good credit counselor may be able to give you an action plan based upon your particular
income, expenses and situation that addresses the cause of your financial problem and focuses
on better budgeting.
Many agencies offer budgeting and money management classes at no or little cost.
Some agencies offer information to educate you on buying your first home.
Cons
All credit counseling agencies are not the same and some attempt to sign you up for a consolidation
loan that may not be in your best interest.
Instead of finding a solution that fits your needs, some agencies pressure people to sign up
for debt management plans.
Some agencies charge excessive fees or fail to disclose their fees.
What to Avoid
Avoid any agency that does not look at your full financial picture, or tries to push you into a
plan of action that does not seem right for you.
Avoid signing any contract you do not understand or that does not sound reasonable and
helpful to you.
Avoid any agency that is aggressively trying to sell you something or that uses counselors
reading from a script.
Avoid any agency that doesn’t offer a variety of options such as budgeting classes or budget
counseling sessions.
Avoid agencies with complaints on file with the consumer protection department of the Attorney
General’s office in your state.
What to Look for
Look for an agency that offers a variety of services and educational opportunities.
The counselor should be looking at your full financial picture and not pressuring you into a plan
or service they provide.
