You need help managing your credit if many of your accounts have been turned over to collection agencies or if you receive daily phone calls and mail correspondence from your creditors. Financial advisers encourage you to tighten up your budget--but if you've done all you can and credit woes still plague you, it may be time to look for help from a certified credit counselor. As MSN Money's Liz Pulliam Weston points out, not all credit counseling services are legitimate. Vet the counseling service to find the most reliable help in repairing your credit.
Step 1
Select a member agency of the National Foundation for Credit Counseling (NFCC). Many nonprofit companies that purport to help you rebuild your credit are concerned only with their own bottom line, the NFCC cautions. The NFCC imposes rigorous standards for all of its members, requiring annual audits by a certified professional accountant and making sure that each client receives a written "plan of action," as well as quarterly statements. Stay away from credit counseling agencies that are self-accredited, the NFCC advises; the agency you work with should be accredited by an objective third party, such as the Council on Accreditation, to ensure that your interests are protected.
Step 2
Review the services a counseling agency provides to ensure it offers a broad range for those seeking credit help. If you're given only one option, that's not a good sign. The NFCC states that a reputable credit counseling agency provides budgeting help, a debt management plan, bankruptcy and foreclosure counseling, and services for first-time home purchasers.
Step 3
Ask about fees. The NFCC says that fees should generally be no more than $50 to set up a debt management program and $25 per month for administrative charges. There should be options to have these fees waived in cases where there is hardship. If an agency purporting to offer credit help fails to disclose its fees or states that fees are "voluntary," steer clear. If you sign up for a debt management plan--a program credit counseling agencies offer to help you repay your creditors--your setup fee should go toward your debt, not into the agency's pocket, the NFCC says.
Step 4
Make sure the credit counseling agency offers a comprehensive approach to your debt problems, the NFCC advises. A counselor should be willing to work with all of your creditors, not just a select few. The agency should be willing to accept you as a client, no matter how small or large the amount of your debt.
Step 5
Double-check the credit counseling agency's reputation. The NFCC advises checking into whether complaints have been filed against the agency with your local Better Business Bureau or with the Attorney General's Office in your state. If there are complaints, ask the agency how they were resolved.
Step 6
Be wary of debt consolidators, negotiators and clinics that claim they can "fix" your bad credit. The Federal Trade Commission says that, just as there are usurious credit counseling services, companies offering these services also have a vested interest in their own bottom line. Thoroughly check out credit repair agencies, the FTC says, as most of these are scam companies and offer the same services that you can do yourself without any cost. To read more about dicey credit "helpers," see References.
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