Consumer’s Guide to Credit Counseling

In a tough economy, it’s not difficult to find yourself in trouble credit wise, which is why many individuals have found their way to credit counseling. The is a strong misconception that everyone in need of counseling has made a series of irresponsible choices to get them there. While this is true of many, it’s not the case for everyone. But no matter why you may need help, it’s good to understand more about credit counseling and in relation to a consumer.

When You Might Need Credit Counseling

So you know that you’ve made some financial errors, whether you felt forced to or are just in the habit of overspending. Now it’s time to decide whether credit counseling is for you. Here are a few key signs that you may want to seek assistance:

  • You can’t make the minimum payment on your credit card(s).
  • You are always late in paying at least one of your bills.
  • You are being contacted by one or more collection agencies and their creditors.
  • You have tried to work out a payment plan with your creditors, but they haven’t accepted it.

How Credit Counseling Can Help

When you select a counseling service, their first job is to help you examine your finances by looking at your income in relation to your expenses. They will then determine if credit counseling is best for you depending on how much in debt you truly are. If you need their services, they will then:

  • Come up with a restructuring and repayment plan of your debt to your collectors.
  • Offer credit education to help you learn about credit and finances so that you can better plan your money the remainder of your life.

What You Can Expect to Pay

If you work with a reputable credit counseling service then you should expect to pay no more than $50 as a combined setup fee with monthly fees.  Depending on who you work with, you may not have to pay anything at all. If you see that a service is trying to charge more than $50, you may want to look elsewhere.

When trying to get your debt under control, it’s good to work with a reputable credit counseling service that will have your best interest in mind. If you’re not sure who to work with, you can always check with the U.S. Department of Justice for a list of reputable agencies.

The first step, however, is to be aware of what is on your credit report. To get the full picture, sign up for an identity protection monitoring service. These services can help you keep an eye on your credit report as you continue to work on your debt.