Reaping Your Rewards

15 questions that will help you find the right credit counselor


Knowing what to ask will help you be prepared before, during and after your initial credit counseling session

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Talking it out is no longer reserved for the psychiatrist’s couch.

When it comes to finances, Americans are seeking credit counseling in vast numbers. Last year, the two largest networks of nonprofit consumer credit counseling agencies assisted a combined total of 7.3 million people.

15 questions that will help you find the right credit counselor“If you’re really drowning, and you’re having trouble keeping up with the bills, it’s never a bad idea to get help,” says Chris Farrell, economics editor of Marketplace Money, a segment of the Marketplace public radio show. “Sometimes it can be really helpful to talk to somebody.”

Not all credit counseling agencies are the same. And even in a good, legitimate organization, not all counselors are equally skilled. How do you find the right help?  Shop carefully, evaluate the advice you receive, and get second and third opinions.

Here are 15 questions you want to ask before, during and after your visit to make sure you have the right counselor for you:

On the phone, before your visit:

1. Is this organization a nonprofit, and which credit counseling organizations are you affiliated with? “It used to be that we’d say, ‘Look for a nonprofit,'” says Farrell. “The problem is the scamsters and high-fee companies learned that and became nonprofits.”

One way to make sure you’re with a true nonprofit is to look for a group that’s affiliated with one of the two major nonprofit credit counseling umbrella groups: the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.

2. Are you a HUD-approved agency? Some credit counseling agencies also do counseling on housing issues and so will have secured HUD-approved status. Even if you don’t need housing help yourself, the designation shows that the agency has “gone through some amount of vetting,” says Lynnette Khalfani-Cox, author of  “Perfect Credit: 7 Steps to a Great Credit Rating.”

3. What services do you offer? Many people simply need education, says Khalfani-Cox. Others want guidance or options for their issues. Look for a nonprofit agency that will have a variety of different services to offer — everything from one-on-one assistance with deciphering your credit report to assistance with creating a budget to online tutorials. Be wary: Some entities masquerade as credit counseling agencies — and may even boast nonprofit status — as a way of selling other services.

4. What are the fees?  What if I can’t afford it? With a legitimate nonprofit agency, money should never be a barrier to getting help. You should be able to get some education for free. And when it comes to services that come with a charge, look for minimal fees.

With NFCC affiliates, financial counseling sessions (which would include reviewing existing monthly bills and creating a budget), are usually free, says Gail Cunningham, vice president of public relations for the foundation. With affiliates that do charge, fees are typically around $15, she says.

For the more dramatic step of a debt management plan, there is a one-time setup fee (typically about $30), and a monthly maintenance fee in the neighborhood of $25, Cunningham says. But if you’re cash-strapped, agencies will cut or eliminate fees.

5. How is service available? These days, agencies are offering one-on-one credit counseling by phone, e-mail or in person. Whether you want one-time advice or a second opinion, you don’t have to be limited by geography.

6. Is the counselor qualified?  When it comes to credit counseling, even in a legitimate agency, “the real problem is that the quality of the offices varies a lot,” says Farrell. Often, by the time consumers go in, they “are pretty beaten down and stressed,” he says.

To be a smart consumer:

  • Ask about accreditation, training and credentials. This is important “for any professional,” says Stacy Johnson, CPA, author of “Life or Debt 2010: A New Path to Financial Freedom” and president of
  • When you go in for a consultation, “As a general rule, don’t sign anything,” Farrell says.
  • Take a neutral party with you, if possible. “They’ll hear different things than you,” he says.
  • Skip the snap decisions. “Walk out and think about it,” Farrell says.
  • Chemistry matters. Even if the counselor is ethical, if you simply don’t like him or her, it won’t work for you, he says.

7. Can I get someone experienced with my problem? After you’ve briefly explained your situation, ask to talk to the most experienced person who’s dealt with consumers with that issue, Khalfani-Cox says. “There’s a difference between a chronic overspender and someone who’s been out of work for eight months,” she says. “It’s important to get someone familiar with the circumstances you’re facing.”

“You definitely have specialists in any organization,” she says. You can also ask for the person with the most seniority.

What you don’t want to hear: “Oh, we’re all equally trained and equally good at everything.”

How many people want help?
How many people want help from consumer counseling agencies?

The chart above shows how many consumers have sought help from the two largest nonprofit consumer counseling agencies over the last few years. Numbers are in millions.

8. Can you give me a brief preview of what you might be able to do for me? On the phone, after you’ve explained your circumstances, ask, “What could you do for me?” The answer you get will tell you a lot, both about the counselor and the service.

If you’re considering a debt management plan, ask: What interest rates can you negotiate on my cards?

“They’ll be able to tell you specifically what your rate will be for each,” says Khalfani-Cox. “Because, as an agency, they prenegotiated an interest rate.”

And a bona fide nonprofit will have no reason to keep you in suspense.

9. How do you and your agency get paid? “People should know how it works,” says Khalfani-Cox. You may be surprised that in addition to fees collected from consumers, many credit counselors get at least some of their revenue from the credit card issuers.

During your session:

10. How will this move affect my credit history and my credit score? Going to a credit counseling agency for advice doesn’t affect your credit. Your creditors won’t even know you’ve been there.

But other moves, such as closing credit accounts or signing on for a debt management program (which may require closing credit accounts or negotiating lower interest rates with creditors), can potentially affect your score.

“Any legitimate agency will answer that question,” says Johnson.

11. How well does the counselor listen before making recommendations?  “For someone to tell you inside of five minutes that they are going to put you on a debt management program is like going to a surgeon for headaches and being told inside five minutes that you’re going to have brain surgery,” says Khalfani-Cox. “That kind of assessment can’t be properly done in five minutes.”

It could also indicate that the counselor “may be like a machine, just turning them out,” she says. “You have to question how much feedback and advice you’re going to get.”

12. Can the counselor adapt plans to my individual needs? One size does not fit all. That means if a counselor instructs you to sell your only car and ride the bus — and that’s not practical for your family — you have to be able say so and draft a new plan. Ditto if you travel for business and need to keep one credit card.

Main theme: Does the counselor listen to what you need? Is he or she willing to work with you? Are you also being reasonable and flexible?

“It can be difficult, but you have to be honest and direct with the person who’s giving that advice,” says Khalfani-Cox.

13. Can I get another counselor? “If, in your gut, you don’t feel good about that person, walk away,” says Larry Winget, author of “You’re Broke Because You Want To Be.”

“It’s a relationship,” says Farrell. Whether you just don’t mesh or believe that the counselor may not have the skills you need, you can ask to see someone else.  Ask to talk to the manager one-on-one, and keep it low key, he advises.

After the session, ask yourself:

14. Was I completely honest? “Your advice is going to be as good as the truth you tell them,” says Farrell.

15. Have I explored other options? Just as with a doctor, “it’s OK to ask for a second opinion,” says Winget.

There are some great credit counselors, and there are some whose advice is “lousy,” he says. And consumers “may not know the advice they’re getting is lousy – that’s the sad part.”  Sometimes “you have to have the guts to say ‘this doesn’t sound right to me,’ ” Winget says.

“Talk to three people,” says Johnson. “And if you don’t like that, talk to three more.” Most important, he says, “trust your gut.”

See related:What sort of debt help is best for you?, Video: How to pick the best credit counselor, What you must know about credit reports and scores, Creating a budget in three easy steps


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