Frequently Asked Questions about Credit Counseling Agencies

Here are the answers to the most commonly asked questions about credit counseling agencies.

What is a credit counseling agency?

A credit counseling agency is a service that provides advice and guidance to consumers struggling with debt. Credit counselors can help you budget and create a repayment plan that works for both you and your creditors. Most credit counseling companies lobby on your behalf with your creditors to arrange more reasonable terms.

How much does credit counseling cost?

Every credit counseling agency will have a different fee schedule. You can find non-profit credit counselors who will work with you for little or no payment. You can also find for-profit credit counseling companies that offer services geared more toward debt consolidation. Of course, for-profit services will have higher fees than non-profit organizations.

Is credit counseling right for me?

Credit counseling is best for consumers who cannot make their monthly minimum payments and are considerably behind on their accounts. You will benefit most from the assistance of a credit counseling agency if you are delinquent on your payments. Consumers who are merely unhappy with their interest rates should not pursue credit counseling. Instead, you might try calling your creditor to request a lower rate or threaten to take your business elsewhere if the creditor doesn't improve your terms and rates.

How do I find a credit counseling agency?

You can find a credit counseling agency by signing up for free on our site. We will refer you to an agency in our network immediately. We have screened all of our credit counseling partners, so you can rest assured that you will be dealing with only the best.

Will credit counseling hurt my credit score?

It's impossible to predict the effect credit counseling will have on your score. After receiving counseling, some lenders might refuse to work with you, but others may not care that you completed a debt repayment plan. Once you complete your credit counseling program, order your credit score from one of the credit bureaus to see if it has changed significantly.

What qualifications should I look for in a credit counseling agency?

Your credit counseling agency should be accredited. Most reputable agencies are accredited by the National Foundation for Credit Counseling. You should also seek out companies that do not charge exorbitant fees up front and pass on most of your monthly payments to your creditors.

Is credit counseling the only way to reduce my interest rates?

No, you can reduce your interest rates by negotiating with your creditors yourself or taking out a consolidation loan. You may also consider a balance transfer to a lower-interest card.

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