How To Find Reputable Credit Counseling

If you’re having problems with your credit and need some help, consider calling a legitimate credit counseling agency for assistance. Here’s how you find a reputable one that won’t scam you.

Credit counseling sounds like a dirty word because there are so many fraudulent outfits out there, but not all of them are bad and there are ways you can sort out the legitimate ones from the frauds. The first step is to determine whether or not you need assistance. If you’re stressed out about your financial situation, whether it’s too much credit card debt or difficulty making rent or car payments, you might want a credit counselor. If your debt burden is starting to crush you, you might want a counselor. Counselors can save you from the ugliness of bankruptcy by renegotiating your debts, reducing interest and finance costs, and help you get back on track with sound financial advice. They aren’t magic bullets, but they can certainly help. Counseling is better than bankruptcy.

How do you find a reputable organization? Contact your local or state government’s Consumer Protection Office and get a list of reputable credit counseling agencies. Never start by answering an advertisement or solicitation, always start with your local and state government’s Consumer Protection Office. They’re charged with finding the ones that won’t rip you off and put you further into debt.

Next, confirm that they are a member of the Association of Independent Consumer Credit Counseling Agencies, a national organization of credit counselors, or the National Foundation for Credit Counseling, a national organization of financial educators and credit counselors. Membership isn’t a guarantee, but it’s a helpful indicator.

Finally, schedule introductory consultations with several companies to get a sense of how they operate, how they are similar, and how they differ. Your internal fraud detector should be able to determine which one you’re better off working with. It’s like getting quotes for anything else, you want to get a better feel for what you should be expecting and meeting with several agencies will give you a better idea. Liz Pulliam Weston of MSN Money has a very informative article on credit counseling, including what else to watch out for.

Have you or someone you know ever met with a credit counselor or otherwise sought similar assistance? Do you have any lessons learned?

Jim writes about personal finance at his personal finance blog, Bargaineering.

(Photo: frankieleon)


Edit Your Comment

  1. alliebean says:

    When I sought credit counseling, I talked to MBNA and they referred me to an in-house representative for Take Charge America. I realize there’s likely some collusion going on between the credit counselors and the banks, but TCA was able to negotiate with everyone but my local credit union (I have a credit card with them). TCA was also as nice as they could be, and I have nothing but good things to say about them. I’m doing much better now, thanks to the help they gave me several years ago.

    • Kevinb77 says:

      @alliebean: I too used TCA (Take Charge America). They were great. I would totally refer anyone I know to use their service if they are in trouble with their credit card debt. In October of 2007 I finally finished paying off my creditors and I was able to finally increase my credit score from the low 600’s to a nice solid 700. Not too shabby.

  2. baquwards says:

    I did my homework and still ended up being screwed by a counseling company. I was finally forced into bankruptcy because of this (all I really wanted to do was pay what I owed). Once you have joined one of these services and it doesn’t work out and all of your accounts are delinquent or in collections, the banks are not willing to even talk to you anymore. My bankruptcy attorney said that upwards of 75% of his clients are there because of these companies.

    They don’t do anything for you that you cannot do for yourself with a bit of research on the internet and all for free. There are many of us out there that learned the hard lessons. Don’t look to others to solve your problems, research and research and fix it yourself, don’t hand over control of your finances to anyone. I never received any money management education from this company.

    • alliebean says:

      @baquwards: When I called TCA, one of the first things they told me was that, should negotiations be successful, I had to keep on top of all my statements and ensure that the payments were being credited properly, that the banks were honoring our agreements, etc.

      Most of my creditors would not negotiate with me on their own, or said that it would negatively impact my credit to do so. So I think the credit counselors have a place, but they have to be legitimate, and you still have to pay attention to what everyone is doing.

  3. hamburglar says:

    That’s pretty much exactly the problem my wife had: did her homework, still got screwed. Luckily it didn’t come to bankruptcy, but one of her creditors would not negotiate with the agency and she wound up with a judgment against her, and the other two creditors ended up making deals directly with her. Basically she wound up paying a ton of money (a few grand) to the credit agency for nothing. Well, nothing except a lot of frustration and shame.

  4. samgmano says:

    Anything a credit counseling service can do, you can do for yourself, and often times better.

    Try the Dave Ramsey plan. It’s working for us. It’s basically the way your grandparents handled their money. The daily podcast keeps me focused.

  5. u1itn0w2day says:

    Personally I do with out but I know many people who never looked at a price tag and still stuggle to shop around even after they got layed off . With mounting debt they have sought help with their credit cards .Apparently they are being coached to try and get the credit card companies to lower their total debt and settle the account .But I also here unpaid debt is taxable .

    But that’s what many of these debt counselors wind up recommend beside debt consolidation .I think the credit history dings will be more signifigant than before .

  6. framitz says:

    I went to an outfit called Debt Free America about 8 years ago. That was the biggest mistake of my life. Sure I got my debts consolidated, but the total payment was not reduced at all which made it impossible to keep up.

    Debt Free America claims to be non-profit which is bull, I paid a fee to get screwed over. These thieves are still in business telling the same lies.

    I ended up filing bankruptcy 3 years later and have stayed nearly debt free ever since.

    • rochec says:


      That’s because you don’t understand what non-profit means. That doesn’t mean free, that means they don’t show a profit it at year’s end. Non-profit’s still make millionaires.

      No one is going to do anything with your debt in any capacity for free. Will never happen, way too much money in it.

  7. N.RobertMoses says:

    My guess if they have an ad on TV, radio or the subway, they probably aren’t reputable. Although Dr. Zizmor seems not to be hurting from his subway ads:

  8. Verucalise (Est.February2008) says:

    A family member of mine tried using one of those rogue companies to consolidate debt or negotiate a settlement. The company promised in their agreement to lower one of the debts down to $11K I believe and they were ready, willing, and able to pay the debt. They screwed her around, and apparently the going rate for that is $4,000. She didn’t read the contract correctly and it said they wouldn’t do ANY negotiating until the $4,000 was paid first… this amount was set to be paid over an 18+ month period.

    She was PISSED, and because they didn’t work on her behalf, our old friend mandatory arbitration kicked in and her husbands paychecks are garnished for the FULL amounts. Not sure how much it is, but it’s not cheap.

    Her husband had too much credit card debt and thats why she tried this route- and boy, I think she learned her lesson.

  9. TEW says:

    Another resource is Dave Ramsey. For some credit counselors are a good thing because they are helping individuals who don’t know anything about finances. The worst thing I ever head was borrowing against the house to pay to lower your rate. I know I am going to receive heat for this but it is a bad idea because you are taking unsecured debt and turning it into secured debt taking away any negotiating power you have.

  10. Anonymous says:

    Bankruptcy is often much better than any ‘credit counseling’ offer. Bankruptcy wipes out debts; ‘credit counseling’ just consolidates them under an even tighter contract.

    Check out both options. Bankruptcy lawyers are generous with free advice because they are trying to sell their service.
    Also ask the low income legal services in your area to recommend honest advisors.

    • You hate your job but you're still working there? says:

      @HarmonyGanaghur: Credit counseling is not the same as a debt consolidation program. Credit counseling may have you making a lump payment to their agency, but those payments should be disbursed to your creditors. Consolidation means the agency takes up all of your debt and you make the payment directly to them.

      The goal of legit credit counseling programs is to effectively substitute the kind of repayment plan you would get with filing certain chapters of Bankruptcy, and not everyone is able to file Bankruptcy that allows the debt to be wiped clean. Plus bankruptcy stays on your credit report for years and has a huge impact on your ability to get additional financing when the filing is complete. Credit counseling may have an impact on your credit but it’s relatively short-term and allows you to pay your debt back in full, leaving you completely debt-free upon the completion of your program. Depending on your credit-standings when you enter into a program (which should be at-will and not a contract agreement with your credit counseling agency) you can even apply for credit while still in the program, though of course it’s not recommended since you’d be in the program for credit issues to begin with.

      For some people filing for Bankruptcy may be their best option, and indeed doing some research beforehand is your best bet, but to say that filing BK is better than any/most credit counseling programs doesn’t seem particularly realistic. Ironically, if you file for Bankruptcy you’ll likely be required to take credit counseling both prior to and after filing, so you would wind up dealing with credit counseling agencies regardless.

  11. David Rodriguez says:

    I have used Care One Credit Counseling and have been very pleased. A couple years ago I was laid off and had trouble keeping up with payments. A couple of late payments and I had compounding fees and skyrocketing interest rates. When I originally signed up, it was with The Freedom Point, which became part of Care One down the road. They got my interest rates under 10% and got me on a fixed monthly payment that I could handle. I haven’t used credit since and have been snowballing my payments as the smaller cards are paid off.

  12. Anonymous says:

    This is great to have a story about Credit Counseling scammers. Years ago, in the 90’s, I had just went through a divorce and an illness so I had trouble paying my bills. I found Consumer Credit Counseling Service and worked with them over the phone and fax (never met them in person). They quickly (supposedly) consolidated my debt and got me a payment that was actually still hard to pay but they insisted that as long as I paid that amount by the due date, I would be paying significantly less on all my debt and I wouldn’t have to deal with the creditors any longer.
    Well…after still receiving statements stating I was now…30…60…and 90 days past due – all while I was making my payments and calling leaving message after message, I was finally forced to file bankruptcy. The so-called service ripped me off of at least 1500.00 at a time when I was so broke, my pets were eating better than I was!
    Please continue to put the word out there – Consumer BEWARE!!! Especially at this time when creditors probably won’t work with anyone (like these scammers). I think other commentors said it well – do your research and try to do it on your own. Let your creditors know you are willing to work with them but need to lower your payment and need their help. Thank you!

    • You hate your job but you're still working there? says:

      @SamitaDecimus: Speaking of being aware, please also be aware that there are several agencies existing under the name Consumer Credit Counseling Services, with various subtitles attached, some of them being more reputable than others.

  13. Anonymous says:

    You can negotiate directly with many of the credit card companies to get on a fixed plan to pay off the cards over a 3-5 year terms. Usually you have to be delinquint of 30 days, but not necessarily. Ask for a reduced payment/payment hardship plan. I had a contractor abandon work on my house, and had to close my own unrelated business, both within a year’s time and subsequently had mounting debt, with one income in the house. Almost all the companies put me on plans spreading out the debt repayment over several years with low
    (under 5%) fixed rates. If you are behind or overwhemed, don’t avoid them. Explain your situation, ask for help. Keep asking. Communicate. Being on a repayment plan with a low rate has gotten my debt manageable on my own. MBNA (now Bank of America) and Chase have been exemplary in this regard.


  14. madfrog says:

    I too have used Care One (also known as AFS) and it was the best thing I ever did. You pay back your debt, but get a reduced rate, in some cases it was 0%! I pay an extra $50 per month to them, and as long as you keep up the payments they waive the fee sometimes, at least once a year. I was 33k in the hole when I started 4 years ago, and now am just under 12k. The people are very nice and always willing to help. I will be debt free in about a year. I would encourage everyone to check this out.

  15. xdreamwalker says:

    I’m currently a client of GreenPath Debt Solutions. On of my creditors referred me there once I became behind. Everything is working out real well for me at this point. I am only about 9 months into a 5 year plan, so we’ll see. I am pleased to report that the highest interest rate I am not paying is 10%.
    I feel good that I am going to be paying back every penny that I owe, yes and interest payments as well. That really does not bother me too much, because I did borrow the money. I guess you could consider it me doing my part to help out the failing banking industry.

  16. techstar25 says:

    Another option is to call your Employee Assistance Program, if your job offers it. Usually your job will offer you the benefit for no charge with no need to sign up. When most people think of EAP, they think psychological or marriage counseling, but debt counseling is a big part of what they do also. I went through my company’s EAP and they directed me to a budget/debt/mortgage counselor who was very helpful, and because they were govt sponsored, the consultations were free.
    If you’re not sure if you have the benefit, call your Human Resources office.

    • CFinWV says:

      @techstar25: This! EAP’s are valuable resources, I work in HR for the government and I remind people constantly about their availability… people forget it’s there or that they do offer financial counseling. It’s great getting a “thanks” from an employee after they got help.

  17. MiAmore says:

    am surprised that I did not see an article on Consumerist for National Consumer Protection Week last week![]

    Several organizations have assembled various experts and advice, many of which included tips on how to work with creditors:


  18. samgmano says:

    There’s nothing these companies can do for you that you can’t do for yourself.

    Do not use a company that says they’ll renegotiate your debt! They steal your money and ruin your credit.

    Consumer Credit Counseling Service is the only credit counselor that’s legit but there are some bad apples.

    The plan that works is the Dave Ramsey plan. All the information you need to get started is on his website His radio show/podcast is like a support group. This plan will have you budgeting like your grandparents did. You’re grandparents (or great grandparents) are the ones who survived the depression and saved the world in WWII. They’re smart and battle tested people.

  19. Urgleglurk says:

    We went the creidt counseling route a few years ago after I lost my job (company went Chapter 7) and spent several months out of work. Our credit union forced us to go with their preferred counseling service, otherwise they would not work with us.
    It has worked out pretty well, though I was a bit miffed at having no choice in who to work with.

  20. SoCalGNX says:

    Like David and Madfrog, I have used Care One Credit Counseling. The program is as they described, I was happy with it and had no problems. I would recommend this company to anyone who has any sort of problems with debt. It works.

  21. Jevia says:

    I used Consumer Credit Counseling Service about 10 years ago when my husband lost his job and we couldn’t afford our payments. A friend referred us because CCCS actually lowered the amount he was paying. Well, that didn’t work for us. They actually wanted us to pay more on our credit cards than we were paying before, which was pretty much minimum. When asked where we were supposed to get the extra money from, they told us to move our “office” into the living room and rent out the room to someone. Like I was really going to rent out a room in our house to a stranger with my young daughter.

    We still tried it out for a few months, but all it did was ruin our credit. One credit company refused to lower their interest/minimum owed and CCCS refused to increase how much they would pay that company until it was “their turn.” So every month that company charged us a late fee, increasing the debt, rather than lowering it. CCCS told us that if we wanted to avoid that charge, we could pay the extra ourselves. Again, with what money?

    Basically, all CCCS did was push us into bankruptcy quicker. At least we did it at a time when we could discharge everything (and keep the house and cars) and now 10 years later its all clear, and so is my credit (and most of my new credit cards).

    • Jubilance22 says:

      @Jevia: That’s really unfortunate. My mom used CCCS successfully to pay off about $20K of credit card debt in less than 5 years.

  22. rushevents says:

    It is unfortunate but the charlatans out there have redefined what a true consumer credit counseling service is for. A true company is not there to get your creditors to lower your payments although they will let you know when you are being screwed over by creditor (usually credit card companies).

    No a true counseling service is just that – counseling. My father worked for a non-profit CCS after he retired. The problem was not finding ways to help people fix their credit mess it was getting those same people to be willing to sacrifice (gasp!) to pay off their debts.

    Things like cancel your cell phone or only keep one phone or cancel your home phone. Use dial up (Gasp! Gasp!) instead of DSL. Cancel your cable TV (Not my TV!) Stop going out to dinner 5-7 nights a week. (Warning code blue!)

    No what most of these people wanted was “How do I keep everything I have just the way I have it and still make my debt go away?”

    His answer? “Win the lottery.”

  23. Beth Clarneau says:

    I know that credit counseling doesnt work for everyone. I went through careone and I kept with it for a good six months. They took my payments from over 1000.00 to 750.00 a month. What I didnt know was 50 of that was going into their pockets for negotiating my interest rates and payments down which is something I could have done for myself. I also shopped around and I was hassled by a few agencies that basically threatened me into credit counseling stating I would only get into worse trouble. This even came from the christian debt consolidation agencies. I was appalled by how they try to attract new victims. We all get into some financial trouble at some point, especially in these economic times, but they make it almost impossible to get out of debt even going through counseling where they end up making bankruptcy the only option.

  24. Distahs says:

    So what do i do if i want credit but have a score of about 300?

  25. ganzhimself says:

    I’ve been working with Money Management International ( for the last 2+ years now. Yes, they do charge a monthly fee, it’s $30, but for me, someone who had a very hard time keeping track of due dates, the service is worth it. I’ve not missed a payment since I started the program, and I can actually see the light at the end of the tunnel now. Before I entered the program I felt like it would never end. It has taken a lot of adjustment for me to live cash only, but it’s definately for the better.

  26. thatsnotfab says:

    I’ve been using Consolidated Credit Counseling Services:
    I haven’t had any problems and I’ve been with the program for almost a year. They’ve been very helpful in lowering my APRs and setting everything up so I only have to pay them one lump payment each month.

    There’s some informercial site with some pretty poor reviews, but I’m convinced that most of those people are idiots who don’t know how to read important material. You should be aware that yes, there is a small fee ($40 if memory serves) to join and yes, every account you want to put on the program must be closed, no exceptions. It’s also a good idea to figure out what your new payment schedule will be ahead of time (maybe before officially joining) and change the payment due dates on all of your accounts so you don’t start getting past due notices (I learned this the hard way, but luckily all of my creditors waived my late fees since I’ve had a perfect on-time payment history).

    It was a big adjustment at first and I still have a lot of debt to pay off, but it’s been such a relief to have a specific time line down so I know that yes, in about than 2 years from now, I will be debt-free.

    • thatsnotfab says:

      @thatsnotfab: I forgot to mention that aside from the $40 start-up fee, there’s a $12 monthly fee (and an extra $5 fee per month if you sign up for automatic checking account withdrawals).

      It sounds like a lot (or maybe not, compared to other companies), but it’s really not that bad, considering how much money I was wasting before, just trying to pay the minimum payments on all of my accounts.

  27. jodark says:

    Why is the picture of a credit card with a .22LR round stuck to it?

  28. valleygirl_18002 says:

    I’m currently working with a credit couseling service, Federated Financial out of Deerfield Beach, FL. I have nothing but good things to say about them and their staff.

    In another 3.5 years, I will officially be debt free!

  29. goodpete says:

    Wow, so many stories here in the comments and so many more stories I’ve seen elsewhere remind me of the SNL sketch: “Don’t buy stuff you can’t afford!” — I highly recommend you watch this.


  30. LordofBacon says:

    “So what do i do if i want credit but have a score of about 300?”

    There are several options. One, you could open up a new credit card with a company that issues credit to people with poor scores. Horizon card services, credit one bank, all these companies offer cards with 300 dollar limits — but with VERY high fees. Something like 120-170 bucks, and 7 bucks a month charged on the card.

    For someone with bad credit, these cards may be a good way to reestablish credit as long as you pay them off quickly and maintain a small balance (Less than 25 percent of the total limit on each card).

    You can also go with the secured card route, by obtaining a secured credit card with your local bank or credit union. You will have to put down a cash deposit for the cards limit. So if you want 300 bucks credit, you put down 300 bucks cash. The money is basically a savings account and pays interest.

  31. u1itn0w2day says:

    What exactly happens to your credit score with by using these services or ‘ negotiating ‘ a settlement yourself ?

    I realize there are people that had a catastrophic event financial or not that can put you in the hole .But sometimes I think these services legitamize reckless spending and an unwiley sense of entitlement .

    I know people who averaged 15-30K of debt per year and knew there was a layoff coming .6 months later they have curbed credit card use but not spending and are currently being ” counseled ” on a settlement .They refuse generics,they define themselves by what brands they use or places they frequent .

    It sounds like alot here got rid of debt and learned an expensive lesson but how did everyone get to the point where they needed a credit counselor .Perhaps that’s why the calus slimmy demeanor many of these services/employees have .

    And I’m one of those who think the credit card companies are greedy sliming price gouging corporate whores who need much more regulation .But it takes 2 or 3 to tango in this case .

  32. chrrey103 says:

    To rushevents:
    We use care One (AFS) they are awesome. We will be debt free in a year. You are absolutely right. We were not bankrupt or default in any way. My husband tried to “negotiate” with the credit card companies and he got so mad we called Care One. We bought a smaller house that will be paid off in 10 years, paid our credit down and I only shop at Goodwill. We have two kids who get the extra. We paid off our cars as well. I do not have manicured nails, a tan or beautiful saloned hair but I will be styling after the kids are gone and i owe NOONE anything.

  33. ben gardners boat says:

    American Consumer Credit Counseling is a good one. They have pretty low fees and do a lot to help you out.

    My sister is getting started with them, and she seems happy. They counselled her for an hour and a half and send her all kinds of helpful stuff in the mail and emails.

  34. thedude99 says:

    Consumers who want to substantially reduce their debt should consider their options before contacting consumer credit counseling services. Companies specializing in debt counseling may be working on behalf of the creditors (your credit card companies, etc.). While they may offer you terms that appear attractive, remember that debt counselors may not have your best interests in mind when designing a payoff program.