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More individuals and businesses are turning towards credit counseling services to help improve their financial situation and get rid of debt. Some consumers, especially who do not research enough before choosing to work with a credit counseling company get burnt.

There in another breed of credit counseling companies called as non-profit credit counseling. Some of them are known to pocket your first month's check calling it a charitable contribution. Go figure! Here, you are working hard to pay off your credit card debt and the credit counseling company pockets the money! This may prompt you to double think if you really need to work with a credit counseling company. However, a credit counseling company is worth it, if you cherry pick the best of the breed. It all boils down on how you choose the credit counseling company.

What does a credit counseling agency do?
Credit counseling agencies can provide you with budgeting and money management advice to get you out of debt and plan and stick to a budget which is the most essential component of credit counseling. They will also work towards negotiating your interest rates with your creditors and explain your situation and convince them to lower your interest rate and slash down or eliminate fees. Some credit counselors will also extend the term of your loan to make payments more manageable.

How to choose a credit counseling agency?
Pull out your yellow pages and open the section for credit counseling. Call up the credit counseling companies listed here and ask if they are members of NFCC (National Foundation for Credit Counseling) or AICCCA (Association of Independent Consumer Credit Counseling Agencies). The be a member of these associations, the credit counseling agency needs to follow stringent rules and policies. Operating practices of these credit counseling agencies and their effectiveness is also considered. You will also be able to visit the website for NFCC or AICCA and find a list of credit counseling agencies in your neighbourhood.
v Once you have narrowed down your list of a handful of credit counseling companies, call your state attorney general office and ask if there are any complaints about the agency. You can enter your state and attorney general in any of the search websites like Google, Yahoo, MSN to get to the website you are looking for.

Questions to ask a consumer credit counseling company

• Ask what all services are provided by the counseling company.
  
• Are there any free education material available to get you started?
  
• Are there any upfront fees? What are the monthly fees?
  
• Are your counselors certified?
  
• Is your firm audited annually?
  

Do it yourself credit counseling
After you have spoken to a credit counseling company, you will need to decide whether you want to work with them or go it alone. There in nothing you can't do yourself that a credit counselor can do for you. You can always consider working with your credit card companies to eliminate late fees, extend the life of your loan, work on a repayment plan or negotiate lower credit card interest rates. Most individuals fail to be as effective as a credit counseling company who handle several hundred cases like yours but it wouldn't hurt to try it out before you seek services from a credit counseling company.

If you lack the discipline to do budgeting and save several hundred dollars a month, the do it yourself approach might not be your best option. In such cases, the best route to take is to consult with a credit counselor. Work with a good credit counselor and choose a repayment amount which can be realistically handled. Many of these credit counseling companies are funded by the powerful credit card companies. So the credit counseling companies are highly motivated to encourage you to cough up as much as you could. Take time to review what you can realistically afford.

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