Questions to Ask a Credit Counselor

In the process of repairing damaged credit, a good credit counselor can be an invaluable resource. Finding a good counselor is all a matter of knowing which questions to ask. Following is a list of the most important ones:

• Is your organization not-for-profit? You definitely don't want an agency that's not nonprofit. But that said, some nonprofits are shams.

• Are your agency and counselors certified? Who provides the certification? Both the Council on Accreditation (COA) and the International Standards Organization (ISO) accredit nonprofit credit-counseling agencies. The National Foundation for Credit Counseling (NFCC) and the Institute for Personal Finance (part of the Association for Financial Counseling and Planning Education [AFCPE]) certify credit counselors.

• What fees will I be charged? Do not, under any circumstances, work with an agency that charges a large up-front fee. The best agencies will work with you for free. Depending on the agency, if they recommend a debt-management plan, you may pay a monthly fee (no more than $50 to $75 per month), and the agency may charge a one-time setup fee (which should not exceed $75 to $100).

• How long will the counseling take? Anything less than 30 to 45 minutes will just deal with surface issues and won't help you to set new goals, understand how you got into debt in the first place, or figure out how to stay out of debt in the future.

• What lifestyle changes will I need to make to be successful? To be successful in getting out of debt, you probably have to make changes in your spending habits. The agency should help you learn to budget, set financial goals, and begin a savings program.