Consumer Reports Credit Counseling Services

Debt Problems Are On the Rise

Consumer Reports, a leading non-profit consumer research and information organization, and the publisher of Consumer Reports Magazine, reports that total consumer debt is about $2 trillion, an increase of 23 percent since 2000. As debt continues to increase, the number of services available to help consumers with their debt is also rising.

Consumer credit counseling is currently a $7 billion industry. Counseling services negotiate lower payments with credit card issuers and other lenders on behalf of an in-debt consumer. The consumer sends their payments to the counseling services which, in turn, sends the payment on to the credit card issuer. They don't charge consumers for their services; however, they do receive a portion of the payments from the credit card issuer.

First Steps with a Debt Problem

In his article How to Maintain Good Credit here at LoveToKnow Credit Cards, BradStroh of Bills.com suggests that you first try to handle debt issues yourself before you turn to professional credit counseling.

A good place to start if you have a credit card debt problem is to contact your credit card issuer and ask for a reduction in the APR on your credit cards. This won't get you out of debt, but it will reduce the rate at which your debt will increase.

If you feel that you need more information on debt settlement, check out the credit counseling and credit card debit help articles here at LoveToKnow Credit Cards for great tips on how to get out of debt.

Finding Consumer Reports Credit Counseling Services

There are no Consumer Reports credit counseling services, nor do they rate credit counseling services, but they do provide information on making money-wise decisions. If you feel that you need to hire a professional credit counselor, their publication, the Consumer Report MoneyAdviser suggests that you:

• Check credentials at the Association of Independent Consumer Credit Counseling Agencies and the National Foundation for Credit Counseling. The members of these organizations are supposed to adhere to certain standards.
• Ask your state attorney general's office or local Better Business Bureau about complaints.
• Shop around and ask about fees, which can vary from service to service.

Not all credit card counseling services are legitimate. Some will take your money, never contact your credit card issuer and then go out of business. Be sure to do your homework and check out the details of how a credit card counseling service works. You will know that you are dealing with a legitimate company if:

• There is no fee or only a minimal fee - The legitimate counseling services usually doesn't charge a fee or, if they do, it is a nominal set-up fee of about $10.
• They are accredited – Legitimate credit counseling firms are affiliated with the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.
• You will have no missed payments – Watch out for credit counselors who take funds from you for a payment and hold the funds as a fee for their counseling services. These missed payments can add further damage to your credit score.
• They make no promises – Some companies will make unrealistic promises about the amount of money they can save you.

Finding a Legitimate Counseling Service

There are several online sources to research a credit counseling service in your area:

• Federal Trade Commission, a part of the U.S. Department of Justice, has a list of approved providers of personal financial management instructional courses. Using this list will help ensure that you are working with a reputable counseling group.
• National Foundation for Credit Counseling (NFCC) was established in 1951, and by the late 1990s was the largest credit counseling organization in the United States. Today they have more competition, but they are still the leader with over 100 member agencies and 900 offices through the United States. Their members are typically known as Consumer Credit Counseling Service (CCCS). They provide counseling services in their offices, over the phone and on the Internet.

One Additional Thought

Be sure that you first attempt to solve your own debt problem. You may be able to start getting your debt under control by lowering your APR, paying more than your minimum payment, stopping your use of credit cards and being sure to make all payments on time. Card issuers will appreciate the effort. By taking these steps, you may find that you don't need the service of a credit counselor.