How to avoid credit counseling fraud
Taking advantage of credit counseling is one of the best ways to avoid years of high-interest payments on credit cards and other debts. Professionally licensed and accredited credit counseling agencies can even help you avoid bankruptcy. When used correctly, these services are wonderful alternatives for people who find themselves mired in debt that has taken over their lives. However, as with any business field, there are some bad apples in the credit counseling service industry.
Credit counseling can be a blessing to those individuals who are caught in a debt trap. With literally hundreds of credit counseling companies trying to garner their share of the market, it’s unfortunate that a few consumers are suckered into credit counseling scams. There are many who lead you to believe that their agency offers a ‘free service.’ Always make sure you ask about any and all fees at the very beginning of your conversation with an agency.
Some of these not-so-trustworthy agencies are usually registered as for-profits. Non-Profits should never ask for money for a credit counseling session. Non-profit credit counseling should always be free, and if for some reason it’s not, then don’t deal with that company because that’s a big red flag! Most of the credit counseling agencies are non-profits, but you must always ask before you start to deal with one.
It is an intense competition prevailing among these types of agencies. There are many credit counseling scams to avoid. To steer clear of them, here are a few warning signs to watch out for as you search for the right non-profit credit counseling agency:
Avoid These Red Flags –
Reviews – Before you zero in on any credit counseling agency, you should always check whether it is a legitimate company or not. Do this by searching online for reviews and searching for the company’s name in a search engine like Google or Bing. Go through a few reviews of the company and find out whether anyone has been scammed by them. There’s a website called RipoffReport.com that consumers can use to voice their concerns about a company so do a quick search and make sure there are no bad reviews for the agency you have in mind.
Reputation – Check on the reputation of a credit counseling agency through organizations such as the local Better Business Bureau. Talk to such organizations and find out whether there are any complaints on the particular company. After all, no one wants a credit counseling firm that has a number of complaints against them logged in the past year or so.
Unreal Promises – Avoid claims, which sound too good to be true. Someone saying they can help get you out of debt within a matter of a few days or a month is a scammer. Remember, debt is always easier to accumulate; paying it off is a totally different thing. You cannot get out of debt overnight; it will take several months to a few years.
Credit History – There are many credit counseling scam agencies which are known to tell their clients that their credit report will be wiped clean once they pay off their debts. Nothing could be farther from the truth. It’s a known fact that bad marks on your credit report will stay on there for a few years. Any derogatory marks like late payments or missed payments will not magically disappear even if the debt is completely paid off. It’s your credit history and it stays on there for a reason.
How to know you’re dealing with a reputable credit counseling agency –
The best way to avoid being scammed is to choose a reputable credit counseling agency. Research credit counseling companies in your area before you choose one. Asking someone who has already been in such a position is a good way to start off with the process.
While for-profit services prefer customers with relatively good credit, as they expect to get the full repayment, not-for-profit services are willing to take the risk of helping people with poor credit. However, this situation creates a new problem because scam companies have been quick to exploit the attractiveness of free services by proclaiming themselves as ones. If you plan to employ a not-for-profit agency remember to check their reputation and accreditation before you sign any paperwork.
Whatever your current financial situation may be, they will provide you with a solution that gives you peace of mind. Whether you sign up for a debt management plan or decide to tackle your debt all on your own, if you don’t want to end up with even more debt, be cautious with any company that claims to get you out of debt in as little as a few months.
Steps to take to find a good credit counseling agency –
First, if a credit counseling services specialist will not meet with you during the initial consultation for a minimum of one hour, keep looking. Credit counseling is not one-size fits all answer. Someone facing debt problems in California is going to face a much different set of problems than someone from Pennsylvania. Your certified credit counselor has to be able to take the time to figure out your particular problems and be familiar with the cost of living in your area in order to take that into consideration when helping you develop a budget during your debt management process.
Next, there’s no reason why any of the credit counseling services in business today should be charging more than $100 to set you up in one of their debt management programs. Credit counseling services that are charging beyond that amount are probably providing poor service on the back end. They’re looking to make their money up front, and then giving your situation scant attention beyond the initial contacts and workups. Look for companies that charge $50-$100 for their creditor negotiation and related services. Chances are they’re looking to legitimately build longer term relationships with their clients.
Finally, avoid any of the credit counseling services you encounter that want to take your money without a written contract that specifically details everything they will do on your behalf. There are unethical credit counseling companies out there that prey on vulnerable people who already feel confused and scared about their financial problems. Keep your mind focused on what’s at stake and choose carefully. Always get the full details in writing for your own protection.
Regardless of what part of the country you live in, you’re probably seeing signs of economic instability. If you think you might be having debt problems in the near future, now is the time to research a good non-profit consumer credit counseling service.
Advantage CCS is a national non-profit credit counseling agency who is licensed and approved to do business in all 50 states. We are proud members of the National Foundation for Credit Counseling (NFCC), long-time standing members of The Council on Accreditation (COA), and we have an A+ Rating with the Better Business Bureau. We’ve been helping people with their debt since 1968 and we can help you too! Give us a call today at 866-699-2227 or visit us online at www.advantageccs.org for free credit counseling and a game plan to get you out of debt!