Are your finances out of control? Credit counseling may be

Are your finances out of control? Credit counseling may be the answer

In the 'good old days' not too many years in the past credit card companies handed out credit cards like candy. Most of us gladly filled up our wallets with at least several of these handy ways to pay for goods we wanted. Those balances have a way of creeping up and up, don't they? In today's economy, if you find yourself in a financial mess, you ought to consider credit counseling as a viable solution to getting your finances back on track.

There's something about those little plastic wallet sized cards, being so easy to use. You see a CD, a dress, a book that grabs your fancy and buy it. However, when the credit card statements come in, there's that OMG moment. Did I really spend that much? Yep. It's quite easy to find yourself in the position of only managing to make the minimum payment, which of course means accumulating interest charges. Credit card debt is really a snowballing financial phenomena. There's the added problem of late fees and the subsequent increased interest rates.

Just as there are counseling services for educational objectives, marriage problems and psychological issues, credit counseling services offer solutions for those of us who need to get a better handle on our finances. In addition to negotiating lower interest rates and putting together a sound repayment plan, some credit services offer debt management and financial education programs.

However, you want to choose a credit counseling service carefully before signing up. With so many people in financial crisis, there are an abundance of less-than-ethical credit services, eager to fleece you! Here are some points you want to clarify before engaging any consumer credit service.

1.Verify that the service is accredited, either with the Association of Independent Credit Counseling Agencies, or the National Foundation for Credit Counseling. Non-profit services are usually your best bet.

2.All credit counseling services will charge a setup fee. Legitimate services charge a nominal fee, in the neighborhood of $10-20. If the service you're considering charges substantially more, this is a suspicious indicator. At the same time, if the service offers one-on-one personalized financial education or debt management coaching, a larger fee may be worth your money.

3.Beware if the service promises 'too good to be true' scenarios, such as settling for pennies on the dollar. The fact is that you will need to pay everything you owe, although renegotiated, lower interest rates can reduce the overall debt. Keep in mind that a consolidated debt program might affect your credit rating. Ask the service for specifics in your situation. Lenders differ as to how they perceive and report your participation in a consolidated credit program. While some creditors view this situation positively, others see it negatively and may not be willing to do business with you in the future.

4.Find out where your first month's payment goes! Unethical services may take that payment as an additional 'fee' for their own profit, which means your credit rating worsens, rather than improves!

Once you've found a credit counseling service that satisfies your objectives with legitimate practices, you can be on the road to a debt free standing and a better credit rating. Expect completing the debt repayment to take anywhere from 18 months to 4 years, depending on the amount of debt and the amount you can manage to repay each month. Good luck!

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