Call several credit counseling agencies and ask these questions:

1. What services do you offer? (Look for an organization that offers a range of services such as budget counseling and savings and debt management classes. Avoid organizations that push a debt management plan as your only option before they spend a significant amount of time analyzing your finances.)

2. In addition to helping me solve my immediate problem, will you help me develop a plan for avoiding problems in the future?

3. What are your fees? Are there set-up and monthly fees? (Get a price quote in writing. By the way, most will have fees, so compare.)

4. Will I have a formal written contract with you?

5. What are the qualifications of your counselors? Are they accredited or certified by an outside organization? If so, by whom? If not, how are they trained?

6. How are your employees compensated? Are they paid more if I sign up for certain services, if I pay a fee, or if I make a contribution to your organization? (If the answer is yes, consider it a red flag and go elsewhere for help. Also, check with your Better Business Bureau to see if that agency has been the target of complaints.)

After completing your homework, set an appointment to meet with the credit counseling agency you have chosen. Even if you do not need a debt management plan, the initial appointment (and perhaps some follow-up) should provide the steps necessary to become debt free.

 

 


by Doug Horst

The Christmas holidays and the New Year season are over. You have returned to your routines after an enjoyable, but busy, holiday season. The recent fond memories of time spent with family and friends and the wonderful gifts given and received are still with you.

Then one day you open your mailbox and the credit card bills waiting for you are an immediate reminder that Christmas is not over yet. You still have to pay for those wonderful gifts you gave. Suddenly, the warm glow is gone and it has been replaced by the sinking feeling of “how am I going to pay for this?”

Many of us can relate to this feeling at some time in our lives. We wonder how we can “stop the bleeding,” and repair our credit. There are many organizations, most of them non-profit, that say they can help. But are they legitimate? Let’s take a brief look at two scenarios to help answer these questions.

If the credit problem is one of inaccurate information on your credit report, you can fix it yourself. Therefore, do not pay anyone a fee to clean up your credit. Instead, order a copy of your credit report from Trans Union, Equifax and Experian — the three major credit-reporting bureaus. You can do this via the Internet or phone.

Once you have received your copies, make a list of the incorrect information on each report (account names, account numbers, incorrect balances, etc.) and send this information back to the credit bureaus as an “investigation request.” Usually there will be a section that tells you exactly what to do when you order the credit report and where to send any disputes you may have. By law, the credit bureaus must report back to you within 30 days of receiving your dispute. If you are right regarding the inaccurate information, it will be removed from your credit report.

Unfortunately for most of us, the negative information on our credit report is accurate. Because it is correct, there is nothing that can be done to change it. However, a positive credit rating can be restored by paying bills on time and reducing the amount of debt you have. This, too, can be done without professional assistance, but sometimes it is just too much debt and/or too difficult to deal with personally. There are many legitimate credit counseling agencies that can help, but beware of those that are not.

Reputable credit counseling organizations advise you on managing your money and debts, help you develop a budget and assist in the process of becoming debt-free. Their counselors are certified and trained in areas of consumer credit and budgeting. The counselors often spend at least an hour in an initial appointment discussing your entire financial situation and helping you to develop a personalized plan for managing your money problems. They also offer follow-up sessions. Most are non-profit, but that does not mean free.

Finding a legitimate credit counselor can appear to be a daunting task in the midst of the hundreds of credit counseling advertisements flooding the airwaves. However, by doing just a little homework, you can determine which companies are legitimate and which are not.

 

First, shop around. The Federal Trade Commission has an excellent article on its website about choosing a credit counseling organization. The web address is: www.ftc.gov/bcp/conline/pubs/credit/fiscal.pdf
Doug Horst is the program director and a certified credit counselor for Consumer Credit Counseling Service of Central Alabama. He can be reached at (205) 251-1572 or at dhorst@gway.org.