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Credit Counseling


Courtesy of: Visa USA and the Consumer Federation of America
Published: April 2006

If you are unable to make satisfactory arrangements with your creditors, there are organizations that can help. The National Foundation for Consumer Credit has local, nonprofit members that provide education and counseling to families and individuals. Locally, many of these organizations are called "Consumer Credit Counseling Service."

For consumers who want individual help, credit counselors with professional backgrounds in money management and counseling can provide support. To promote high standards, the NFCC has developed a certification program for these counselors. A counselor will work with you to develop a budget to maintain your basic living expenses and outline options for addressing your total financial situation.

If creditors are pressing you, a credit counselor can also negotiate with these creditors to repay your debts through a financial management plan. Under this plan, creditors often agree to reduce payments, lower or drop interest and finance charges, and waive late fees and over-the-limit fees. After starting the plan, you will deposit money with the agency each month to cover these new negotiated payment amounts. Then the agency will distribute this money to your creditors to repay your debts.

With more than 1,500 locations nationwide, these agencies are available to nearly all consumers. Supported mainly by contibutions from community organizations, financial institutions, and merchants, these agencies provide services free or at a low cost to individuals seeking help. To contact a government approved credit counseling office near you, click here.

Possible Pitfalls

Beware of credit counselors who are in it for the money. Often for-profit or non-credentialed counseling organizations make promises that they cannot or do not keep. Be especially careful when asked for a large sum of money in advance. To check the organization's reputation, contact your state Attorney General, consumer protection agency, or Better Busines Bureau.

"Credit Repair" Clinics and "Credit Doctors" have been frequently criticized for promising that they can remove negative information from your credit report. However, accurate information cannot be changed legally. If the information is old or inaccurate, you can contact a credit bureau yourself and ask that it be corrected or removed.


Certified Credit Counseling Service: CareOne Credit




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