Choosing a credit counselling firm is not easy as there are many not so reputable firms around. If you are able to pay more than the minimum payments for your debts, you should generally avoid this route and instead trim your budget and have a more aggressive plan to pay down your debts faster.

But here are some check points to consider :

Is the credit counselling firm accredited?

You should check with the National Foundation for Credit Counselling or the Association of Independent Consumer Credit Counselling Agencies. Go to the following websites for more information - www.nfcc.org, www.aiccca.org.

What fees are being charged?

Well, when you have serious problem paying off your debts, the last thing you want is to pay more “unnecessary fees”. $50-$75 to set up a plan would be reasonable.

Ask When and How Much will the creditors get paid?

Many credit counselling firms get a monthly payment from their customers and then threaten your creditors to miss payments if they do not negotiate the amount of debt owed. Missing payments or having late payments can dramatically lower your credit scores. Ask and have in writing when and how much will creditors be paid.

Check the Better Business Bureau

Call the BBB in your area and check how many complaints does the firm have against them. You should be take the extra steps and check with your State Attorney’s Office to see if there are any regurlatory actions filed against them. Yes, it is quite a bit of work. But this can save you from unpleasant experiences down the road.

What do these organizations promise you?

Anyone who promises that there will be no impact on your credit score or if that they will settle your debts for less than you actually owe is probably being very unrealistic. You are likely to end up with massive disappointments with you work with people who overpromise. You should work with someone who lays out the full picture, the best case scenario and the worst case scenario and is honest about the impact it could have on your credit score.

Ask for referrals

Better still, if you know anybody who has been in a similar situation, talk to them about who they used and their experiences. You will pick up a few tips on how to approach credit counselling firms.

Well, you will probably send some time just searching for the right organization to work with. Take your time, do your due diligence and you are less likely to be disappointed.

This entry was posted on Saturday, April 7th, 2007 at 10:52 am and is filed under Credit Card Debt, Credit Reports and Scores, Debt Reduction, Tips and Advice. 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.