Working With a Credit Counselor in a Time of Need

Credit counselors provide a much-needed service to consumers. Thousands of people are drowning in debt, and they don’t know how to fix a low credit score or get rid of their persistent bill collectors. Credit counselors often teach their clients how to manage money, take care of a FICO score and pay down debts faster. If you find yourself in financial trouble, a competent counselor can help you create a customized plan of action for your unique situation.

What to Expect From Your Credit Counselor

Most credit counselors prefer to meet their clients face-to-face. Other agencies work through the Internet. They email, Skype, and communicate with clients over the phone. One counseling style is no better than the other one, so it’s up to the consumer to decide what he or she prefers.

First, the counselor will ask you for your financial paperwork. This includes bills, whether paid or unpaid, bank statements, collection letters and loan papers. They will look over your credit report and analyze your debt-to-income ratio. From there, they work with the client to determine how to fix his financial problems. The counselor may advise the client to start a debt repayment plan and teach him how to improve his credit score.

How to Research Counseling Agencies

You can research any credit counseling agency through the Better Business Bureau or the Attorney General in your state. Or you can even check with with the National Foundation for Credit Counseling.

Many agencies will provide free information or a free meeting to determine if it’s the right fit. Ask the counselor about the exact services he or she offers. Most agencies will help the client learn about basic money management in addition to debt management. Ask the counselor if he or she can develop a financial plan that will help you avoid problems in the future. Remember to ask about fees and get them in writing. Always get a contract with the company before you hand them any money.

Your counselor’s qualifications are also important, so ask him if he is licensed to work in the state. Find out about her educational background, especially as it pertains to credit counseling. Finally, ensure that your personal information will be kept confidential.

Managing Your Debt

Debt is a major problem that affects many people today. Credit agencies generally help clients sign up for debt management programs that help them pay off debts faster and with less interest. With debt management through a company, the client pays a certain amount of money to the company each month. The funds go toward paying off your debt, such as outstanding loans and credit card bills. Most agencies will help you lower your bills by negotiating lower interest rates. Debt settlement, on the other hand, is when the credit counselor helps you lower your payoffs. Companies that practice debt settlement must adhere to strict federal laws. For example, they are not allowed to collect any fees from the client before reducing/settling his debt.

Who Needs a Credit Counselor?

People who visit credit counselors come from all walks of life. College students, professionals and seniors all utilize the services of credit counselors. When they realize that they can no longer control their mounting debt, they visit an agency to learn about viable options. Getting out of debt is an important goal in your financial management plan, so don’t delay in setting up an appointment to speak with a professional if you need help.



Filed Under: Debt

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About the Author: Jeremy Vohwinkle is a Chartered Retirement Planning Counselor® and spent a few years working as a financial planner. Today, he helps people make the most of their money by writing about personal finance here and elsewhere on the web. Jeremy is also Coach at Adaptu and a regular contributor for other publications such as Intuit, and American Express. Be sure to follow Jeremy on Twitter or Google+.

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