Check out credit counselors' credentials first
Ask The Credit Guy
Dear Credit Guy,
I live in Colorado and I am looking for a credit counseling service to settle my debt and get me back on my feet with repayment to creditors that I cannot yet settle with. When I am looking for a counseling service, what licenses should the company have by law? Are there specific licensing or insurance these companies carry?
You are a smart consumer to ensure that the credit counseling agency you choose is compliant with state laws and has all required licensing. Due to some bad players in the credit counseling industry who took advantage of uneducated clients, most states have laws in place to protect consumers.
In Colorado, the Colorado Uniform Debt-Management Services Act regulates the credit counseling industry. What you need to ask before working with a credit counseling agency is:
• Is the agency registered with the Colorado Attorney General's office?
• Is the agency accredited by the Council on Accreditation or ISO 9001: 2000 Standard?
• Are the counselors certified by Association for Financial Counseling and Planning Education (AFCPE), Center for Financial Certifications, National Association of Certified Credit Counselors (NACCC), National Foundation for Credit Counseling (NFCC) or the National Institute for Financial Education of America (NIFE)?
|Hit with a interest rate hike?
Here's a step-by-step guide
|These CreditCards.com articles about what to do if your credit card APR is going upwill help you take the proper steps to take to protect yourself and your credit.
If the agency at which you are seeking counseling can answer all three questions yes, then you are dealing with an agency that not only meets the requirements to operate in Colorado, but also has your best interests in mind.
Utah, Rhode Island and Delaware have also adopted the Uniform Debt-Management Services Act. For readers in other states, check your state attorney generals' office to determine which agencies meet state laws.
I would also recommend you keep in mind the following when choosing a credit counseling agency:
• The agency should be nonprofit and a member of the Association of Independent Consumer Credit Counseling Agencies (AICCCA) or the National Foundation for Credit Counseling (NFCC).
• The agency should not require a large upfront fee to work with you.
• The initial counseling session that takes place either in person or on the telephone should be free.
• Fees for a debt management program should not exceed $50 per month.
• A counselor should meet with you for at least an hour performing a full budget analysis before making any recommendations.
• All procedures and fees should be disclosed upfront.
• Check with your local Better Business Bureau to ensure the agency has a good customer service record.
Take care of your credit!
Todd Ossenfort is the chief operating officer for Pioneer Credit Counseling in Rapid City, S.D. Pioneer Credit Counseling has been a member of the Association of Independent Consumer Credit Counseling Agencies since 1997.
The Credit Guy answers a question about a debt or credit issue from a CreditCards.com reader each week.
Send your question to The Credit Guy.
- Can I get refund for suspicious card charges 1 year later? – If you catch unauthorized card charges after a year, your bank might help you. If they were recurring charges you forgot, you might be out of luck ...
- How to restore credit after maxing out cards – Reaching a 100 percent utilization due to maxed-out cards can hurt your credit score. To give it a boost, pay off balances and rein in spending ...
- Q&A: Will my minimum payment decrease if I pay down card debt? – It is wise to pay down credit card debt to reduce interest charges. Want to lower the interest you pay further? Pay more than the monthly minimum ...