How to Choose a Credit Counseling Agency

If you're struggling with debt, it can seem as though there's no one to turn to. But in reality, with the boom of consumer credit counseling agencies, there are plenty of people willing to talk with you about your debt problems. The question is, are they worth talking to? The answer depends on the agency. The steps below can help you avoid the ripoffs and choose the right credit counselor for you.


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    Check with organizations you trust. Many universities, credit unions, military bases, housing authorities and local agencies (such as the USDA extension service in the U.S. and Citizens Advice Bureau in the U.K.) offer free or low-cost debt counseling. If you work for a large company, your employee assistance plan may also offer credit counseling or referrals. While these organizations typically don't offer debt management programs, they do provide a wide range of other services, including budget planning, and they can help you decide if a debt management program is right for you.
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    Ask friends and family. Consumer debt is a widespread problem, so you might know someone who has already used a credit counseling service. Some people are hesitant to talk about financial matters, but it doesn't hurt to ask around, especially if you know someone has been through credit counseling. Friends, family, and other trusted associates can also provide a wealth of advice on financial issues.
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    Look for a non-profit agency with a long history. Choosing a non-profit agency can help you minimize the cost of credit counseling, but be aware that non-profit status is no guarantee of an agency's legitimacy, and it's also no guarantee that their fees will be reasonable. Many credit counseling agencies are non-profits, and some are better than others. The longer an agency has been in business, the more likely it is that it is legitimate and won't go out of business after you've begun a debt management plan with them, so try to find one that has been in business for at least 5-10 years.
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    Know and understand that fixing credit may not be a simple or quick solution. Building up your credit score will take time and proves to the credit agencies and businesses that you can pay your bills and debt off in the long run and not just simply for a few months or just a year. The longer you can show good financial standing the better.
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    Find an accredited agency. In the U.S., make sure an agency is a current member in good standing of at least one of two large trade associations, the National Foundation for Credit Counseling (NFCC) and the Association of Independent Consumer Credit Counseling Agencies (AICCCA), which require rigorous third-party accreditation for their members. You can look at these organizations' websites to find an agency near you. An agency should be accredited by either the Council on Accreditation (COA) or the International Organization for Standardization (ISO). Like non-profit status, accreditation is a good sign, but it's no guarantee of an agency's quality.
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    Make sure the agency is licensed, if required. Not all states in the U.S. or jurisdictions in the world require credit counseling agencies to be licensed, but if your jurisdiction does, make sure the agency you're considering is currently licensed. Licensing is administered by different agencies--departments of corporations, departments of commerce, or divisions of banking, for example--in different places, so you may have to make a few phone calls to find the appropriate agency. Again, keep in mind that you still need to do your due diligence even if a firm is licensed.
    • In the U.S., all people considering bankruptcy must receive credit counseling from an agency approved by the Department of Justice. You can locate an approved agency on the DOJ's website.
    • If you need assistance with mortgage debt, find an agency that is certified by the U.S. Department of Housing and Urban Development (HUD).
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    Look for complaints. Compile a list of potential agencies--preferably ones that have an office near you to provide in-person counseling--and research them with agencies where complaints might be filed.
    • Look at the company's reliability report with the Better Business Bureau. It should be both listed and free of unresolved complaints. Check the Bureau's website and watch out for companies with a long list of complaints. Look at how long the company has been in business and contrast that against the number of complaints the company has had. It's very rare for a company to be in business for very long without getting any complaints, but don't consider any company that's only been in business for a short time yet has a list of complaints with the BBB. If a company does have complaints, be sure they are resolved. Ask the company about the complaint and trust your gut when you hear their response.
    • Check with your state attorney general. In the U.S. the National Association of Attorneys General maintains contact information for state attorneys general offices. Look up the company on your state attorney general's website, or call the AG's office to find out if any complaints have been filed against an agency.
    • Check with the relevant regulatory authority in your jurisdiction. If you live outside of the U.S., contact the appropriate consumer protection, commerce, or banking agency in charge of regulating credit counseling agencies and tracking complaints.
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    Ask for information about the firm. Reputable credit counseling agencies will provide free information about their services without asking you for money or requiring that you provide them with personal information about your finances. If a company wants an upfront fee or won't talk about the services they provide without seeing your credit card statements or other information, don't bother with them.
    • Seek an agency that provides a wide range of services. A lot of so-called credit counseling agencies should really be called debt management agencies, because they push all their clients into debt management plans right away, often without offering any real counseling. Don't deal with these agencies, as most people don't really need to enroll in a debt management plan. Look for an agency that will provide budget advice, savings and credit classes and free educational materials in addition to debt management plans.
    • Ask about the qualifications of their counselors. Find out if the counselors are certified or accredited by an independent agency. If not, ask how they are trained and what other qualifications they have.
    • Ask how employees are compensated. Some agencies pay their counselors incentives if they persuade customers to sign up for certain services. This means that the counselors may not always have your best interest at heart.
    • Inquire about the security of your personal information. If you participate in credit counseling, the agency will probably have access to your personal financial information, including credit card statements and other bills. This is especially true if you enter a debt management program. Make sure that your information will be safe by inquiring about their privacy policies and safeguards.
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    Don't pay unreasonable fees. In the U.K. you can generally obtain counseling absolutely free. In the U.S., it is normal for an agency to charge a small fee, but you should never have to pay exorbitant fees. You may be able to get at least one or two free consultations (or at least an hour's worth of free consultation), and in most circumstances fees should be no more than $50 for all your counseling needs. If you are truly unable to pay the fees, ask the agency if they can be waived. If they aren't willing to waive the fee in this circumstance, look elsewhere. Get fee information in writing, and read it carefully to make sure that you don't get bitten by any additional monthly fees or other charges after the initial fee.
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    Choose a debt management program carefully. If you can benefit from participating in a debt management program, be sure to do some extra research before enrolling. These programs differ from counseling in that they require you to actually entrust your debt payments to the counseling agency, who then disburses payments to your creditors. See the related wikiHow for guidelines on what to look for in a debt management program, and be very careful when choosing such a plan, even if you've already been working with a credit counseling agency.


  • Credit Counseling services require a fee and have no more power than you do. Create a simple budget. Organize and prioritize your debts then call each creditor to discuss a new payment plan. When using a Credit Counseling service, the chances of a negative impact on your credit report is higher than if you called the creditors and handled it yourself.
  • If your jurisdiction requires licensing for credit counseling agencies, there may be exemptions. For example, some states do not require non-profit agencies to be licensed, and some do not require licensing of agencies that perform only free services. If you find that an agency is not licensed, ask the regulatory agency if there are applicable exemptions to licensing.
  • Do your own research. There are a lot of options (i.e. debt management, consolidation, and debt negotiation) for people with debt problems. If you take time to learn more about these options you'll benefit more from your counseling and you'll be able to make informed decisions about your counselor's recommendations. You can never know too much, but if you know too little, you're just asking to get ripped off.
  • You can also be your own credit counselor. Once you make the decision to be debt-free and live on a cash basis, cut and throw away your credit cards, then call each of your credit card companies and negotiate a settlement. Pay off the amounts you negotiated, and enjoy your freedom. If you have a Significant Other, support each other in this endeavor and you'll both reap the benefits.
  • Credit counseling can work wonders to help you get out of debt, but it's not effortless. Your counselor can help you make a budget and work out a payment plan, but it's up to you to follow through.
  • If you decide to go it alone be aware that most creditors will be interested in getting their principal back. That is, they want the money from the cost of the original purchase. If you explain that you are willing to pay off the principle in fixed amounts and that you may have to declare bankruptcy if you have to pay finance fees the creditor may be willing to wipe any interest. You must be willing to stick to a payment plan to make this option work. If you break the agreement the creditor will no doubt reinstate all interest charges and possible late fees, etc.


  • This article provides general guidelines only. It is not intended to replace professional financial or legal advice; nor is it intended to advocate any particular product, service, or company.
  • Tread slowly and carefully, and assess your options fully. If you end up in worse shape because you take poor advice, it will be you that ultimately suffers.
  • Beware any company that claims to be able to erase debts from your credit history or that says it can reduce your debt. Accurate negative information cannot be removed from your credit report, and companies that claim to be able to "cut your debt in half" may be using tactics, such as settling your debts with creditors, that can devastate your credit rating. (Note: settling debts by negotiation can hurt your credit rating, but in 5 years or less you may be eligible for credit again if you want it).

Sources and Citations

  • National Association of Attorneys General
  • U.S. Department of Justice List of DOJ-approved credit counseling agencies (approval is required only for those that perform bankruptcy counseling).
  • Association of Independent Consumer Credit Counseling Agencies
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