In my last post, I talked about how the emergence of for-profit credit counselling firm has altered the landscape in this industry. We are now going to talk about a few steps you should take before choosing the right firm to work with.

1. Check if it is accredited

It is best to work with a credit counselling firm which is affiliated with either the National Foundation for Credit Counselling or the Association of Independent Consumer Credit Counseling Agencies. You should check their websites to see if the firm you are considering is affiliated with them.

http://www.nfcc.org

http://www.aiccca.org

2. Check with your local regulators

Call your local Better Business Bureau (BBB) and the state attorney general’s office. Check if there are any complaints against them and if there are any actions taken against them by any regulators.

3. Fees

I have not really taken a survey on the fees. But you should shop around with a few firms.

4. How much is the credit counselling firm paying your creditors?

The reason why credit counselling firms have got such a bad reputation is that the unscrupulous ones do not pay your creditors the check you send them. Some want to negotiate even harder for a lower payment. Missing your payment is going to hurt your credit score. This will prevent you from doing any refinancing or taking out any new loans. It is best to have this in writing.

5. Unbelievable Promises

If the firms you are speaking to are making unbelievable promises, it is best to walk away. What are ridiculous promises? Like telling you credit counselling will have no negative impact on your credit. Or that they can settle you debt or reduce your payment without affecting your scores. These claims are a telltale sign to stay away.

6. Speak to friends or people who have used their services

In situations like these, it is best to get a few referals and ask them about their experiences.

Well, I think if you take these steps, your experience with a credit couselling firm will be better than if you simply fall for the best sales pitch.

This entry was posted on Friday, April 20th, 2007 at 12:07 am and is filed under Credit Reports and Scores, Debt Reduction, Personal Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.