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Why you may need credit counseling

by Francine Huff

If it seems like you never have enough money to cover expenses and constantly turn to credit cards, something needs to change. It could be that you just need to budget your money better to make ends meet. But if financial trouble follows you no matter what you try, it could be time to find a credit counselor.

High credit card debt

A huge sign that you have a serious money problem is if you can't pay utility, food, gas and other necessary bills without using credit cards. You should not rely on credit cards for those purchases. Doing so can run up credit card debt to unmanageable levels before you realize what's happening. Not only can this cause your credit score to drop, but it can result in a lot of stress and worry.

What can a credit counselor do?

A credit counseling service can help you take control of spending habits to get out of a cycle of credit card debt. A counselor can help you put together a budget and debt reduction plan based upon your current income. The counseling agency also may offer classes and workshops that teach money management skills. A credit counselor does not loan money to consolidate debt.

Finding a credit counselor

You may have spent some time shopping around and comparing credit card deals. Finding a credit counselor is no different. Take time to compare counseling firms. Generally, it's best to stick with a nonprofit agency that offers free or low-cost services. But not all nonprofits are created the same, so check out counseling agencies with the Better Business Bureau and your state attorney general's office.

Questions to ask counselor

Before signing up, ask prospective agencies the following questions:

  • Do you have to pay before getting help?
  • What services are offered?
  • Is there a monthly fee for services?
  • What kind of classes or training is offered to help you learn better money skills?
  • Do you have to sign a written contract?
  • Do you work with the same counselor each time?
  • How much training and experience does the counselor have?
  • Is the credit counseling agency licensed?
  • Does the agency offer a debt-repayment plan and how does it work?

These are just some of the questions you should ask any credit counseling agency you want to work with. It's important to feel comfortable with anyone you choose to counsel you about credit card debt.

Published 06/13/12

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