Service Fees

• Do research before selecting a company to manage your credit and debt. There are countless options available, and choosing the wrong type of consumer credit counseling agency can result in paying a setup free for the service, as well as a monthly service fee. Avoid fees by working with a nonprofit credit counseling agency. These counselors assess your situation for free, then provide a plan to improve credit and get rid of debt faster.
  
  

False Claims

• Some consumer credit counseling agencies lure consumers by promising to reduce debts by half, or settle debts for much less than the balance owed. Counselors do work with creditors to bring down your interest rate on credit cards and other loans. However, according to Expert Law, consumers should proceed with caution when agencies claim they can significantly reduce balances. Results are often exaggerated and promises undelivered.
  
  

Payments

• Debt consolidation is an aspect of credit counseling, wherein agencies receive one payment from those enrolled in the program and then make payments to their individual creditors. This works if someone has a habit of paying bills late. Unfortunately, credit counseling agencies can also submit payments after the due date, which can trigger additional credit problems. Speaking with a counselor beforehand to ensure he has a record of due dates can help alleviate this problem. Consumers should also check the status of payments periodically with their creditors to ensure that counselors are doing their job properly.
  
  

Credit Report Issues

• Help from a consumer credit counseling agency can impact how other creditors view you. If submitting an application for credit in the future, creditors reviewing your credit history will see "third party assistance" and think twice before accepting your application. To creditors, getting assistance to manage credit and debt points to the inability to oversee your own finances.