When debt starts to feel overwhelming, knowing how to move forward and who to trust can seem daunting. Certified credit counseling agencies can help you come up with a plan, but knowing what to look for can give you the confidence to seek the help you need.
Here’s what you should know when looking for a reputable credit counseling agency:
Use Trusted Sites
When looking for a credit counseling agency near you, use the National Foundation for Credit Counseling (NFCC) or Financial Counseling Association of America (FCAA) to locate a certified agency near you.
Check Credentials
Certified credit counseling agencies are nonprofit organizations, so start by looking for a 501(c)(3) disclosure, typically found at the bottom of the agency's homepage. From there, check that the agency is accredited by either the NFCC or the FCAA, both of which are recognized standards in the industry. Finally, a quick search on the Better Business Bureau (BBB) can tell you a lot about an agency's reputation and whether they're a member in good standing.
Reputation Is Important
Another way to ensure you’re working with a reputable company is to look for reviews on TrustPilot or the BBB. Simply doing a Google search can also bring up a number of forums, boards, and review sites, allowing you to get a good grasp of whether it’s a company in good standing.
How Much Are They Charging?
Reputable, nonprofit credit counseling agencies are required to provide free budget counseling and financial guidance, so that initial help shouldn't cost you a thing. If you need additional services, like a debt management plan (DMP), a small monthly fee may apply, typically around $40–$50. However, if cost is a barrier, many agencies will waive the fee entirely. One of the hallmarks of a certified agency is full transparency around fees, so there’s no surprises.
Proceed With Caution
Watch out for debt consolidation or debt settlement companies. They often use predatory practices that can end you up in deeper debt than you began. A debt consolidation loan rolls multiple debts into one monthly payment and can help your credit score, but it comes with risks. Approval isn't guaranteed, bad credit often means high interest rates, and without changing spending habits, the problem remains.
Debt settlement is a last resort. While it may reduce what you owe, for-profit settlement companies charge 15%–20% of settled debt, typically advise you to stop making payments entirely, and can leave your credit score worse off with no guarantee lenders will settle at all.