If you are having trouble with understanding and managing your credit, perhaps you would benefit from the expertise of a credit counselor. Credit counselors can help you in a number of ways, from basic financial education and budgeting to debt management. Many communities have free or reduced cost services available at credit unions, religious and non-profit organizations, and other locations.
However, it's important to make sure that you seek credit counseling from a qualified source. Anyone can claim to be a credit counselor. How can you be sure that qualified counselors will deliver your advice? Start by asking for the certifications and accreditations of any credit counseling service before you decide to use their services.
In particular, look for membership in one of two organizations: the National Foundation for Credit Counseling (NFCC) or the Financial Counseling Association of America (FCAA). Both organizations require that their member agencies receive periodic accreditation by independent third parties. The accreditation process verifies that member agencies meet certain operating standards. For details on accreditation and standards, look here for NFCC and here for the FCAA. Third-party accreditation is preferred to avoid potential conflicts of interest with affiliated organizations.
There are a variety of certification titles and acronyms such as Accredited Credit Counselor (ACC), Accredited Financial Counselor (AFC), and other designations that can be confusing to those outside the industry. Further, there are multiple sources for certifying counselors. The National Association of Certified Credit Counselors (NACCC) and the Association for Financial Counseling, Planning, and Education (AFCPE), among others, offer specific credit counseling certifications, but do not necessarily use the same curriculum (just as degree programs can vary at different universities).
If you are not comfortable with certification and accreditation, ask the counselor for the source of their qualifications and to explain them in greater detail.
You cannot necessarily assume that a higher-level certification is best for your needs. For example, Certified Financial Planners (CFPs) receive some of the most extensive training possible, but that training is weighted toward those with greater financial resources. Accredited Financial Counselors or Accredited Credit Counselors deal more with consumer debt management, credit score improvement, bankruptcies, and other issues more pertinent to those needing basic assistance.
As a general rule, Accredited Credit Counselors will have a greater focus on training to help those having difficulties with credit and debt management, as well as the counseling skills necessary to help those with lesser financial backgrounds understand their options. If you want to reduce your interest payments and lower your debt, try the free Debt Optimizer by MoneyTips.
For a final check, investigate the agency with your state Attorney General's office and any local consumer protection agencies. Look for any pattern of complaints that have been registered. You can also check with the US Trustee Program's list of agencies that are approved for pre-bankruptcy counseling.
Any reputable agency should be willing to supply you with information about their services without asking for any of your financial details. Beware of this and any other red flags such as fees for basic information services or an early insistence on a fee-based Debt Management Plan (DMP) before your financial situation is thoroughly reviewed.
We applaud you for taking the first step in managing your credit, but don't lose the momentum by making an unwise choice of credit counselor. Simple research can save you from potentially bad advice and an even worse financial situation.
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