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Should You Use Them?

More and more people are turning to credit counselors to help them get out from under a mountain of debt. Some consumers are finding out the hard way, however, that not all credit counselors are created equal. One so called "non-profit" counseling agency pockets your first month's check, which you assume is being applied to your debts, and calls it a "charitable contribution." Agencies like these may make you wary of seeking help from a consumer credit counseling agency, but if you know how to choose a reputable agency and you exercise a bit of caution, you can benefit from their services.

What Can I Expect From a Credit Counseling Agency?

Just what can you expect from a credit counseling agency? Besides providing general budgeting and money management advice to help you prevent future debt problems, they can negotiate with your creditors to get them to eliminate late fees, extend the term of your loan, or lower your interest rate. If your debt is burdensome enough, the credit counselor will encourage you to enter into a debt repayment plan requiring you to pay a set amount to the agency each month, which they then pay to your creditors.

How Do I Choose a Credit Counseling Agency?

For starters, find out which credit counseling agencies near you are members of the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA), the largest and most respected networks of credit counseling agencies. Members of these associations are put through a rigorous accreditation process performed by independent third-party organizations, which carefully review the operating practices of the credit counseling agencies and the effectiveness of their counseling.

The widely-known Consumer Credit Counseling Service (CCCS) is a member of the NFCC. You can find a list of agencies near you in your local phone book yellow pages or online at NFCC's Web site or AICCCA's Web site (see link box on upper right for links to Web sites).

Once you've narrowed your search down to one or two agencies, it's a good idea to check them out with one or more of the following to see if complaints have been filed against them: your state Attorney General's office, local consumer protection agency, and Better Business Bureau. You can find contact info for your State Attorney General at the National Association of Attorneys General Web site.

Now you're ready to call the consumer credit counseling agencies and ask them a few questions such as:

• What services do you provide?
• Do you provide free educational materials? If so, how can I obtain them?
• Are there fees for your services? What are they? Do I have to pay anything up front? Are there monthly fees? How are they calculated?
• What training do your counselors have? Are they certified or accredited?
• Who oversees or regulates your agency? Is your agency audited annually?

If this seems like a lot of work, remember that you're trusting your credit record and your personal information to the credit counseling agency. You want to be sure that you're in good hands.

Should You Use a Credit Counselor or Do It Yourself?

After you've spoken to a representative of the credit counseling agency, you'll have to decide whether to use the agency's services or go it alone. Credit counseling agencies really can't do anything for you that you couldn't do for yourself, theoretically at least. You could attempt to negotiate with your creditors to lower interest rates, extend loan terms (to catch up on late payments or make your payments more manageable), or remove late fees. In reality, the average person will probably not be as effective at doing this as a credit counselor, but it may be worth a shot before you enter into a debt repayment plan.

Be honest with yourself: if a lack of spending discipline is what got you into the pickle you're in, you may not have the discipline to pay down your debt without the help of a credit counselor. If you decide to go this route, make sure not to enter into a debt repayment plan that requires a higher monthly payment than you can realistically handle.

It may surprise you to learn that most credit counseling agencies are funded primarily by credit card companies. They are therefore motivated to encourage you to pay as much as possible on your credit card debt, even if it's more than you can afford.

Your credit report score is one of your most valuable assets since it determines whether creditors will approve your loan as well as how much this credit will cost. Scores vary from 400 to 850, and if you have a sensible amount of debt, pay all debts on time, and have never filed for bankruptcy, you can expect a high score of 750 to 850. To be eligible for credit at a lower interest rate, it is a must maintain a score higher than 680.

Credit scores fall for many reasons, and below are some helpful tips to boost your credit score: A trade-line is an item on your credit report. Any mortgage, each revolving loan, or each credit card, is a trade-line. To get a high credit score, it is necessary to least maintain three trade-lines that show a good payment history for a year. You may want to apply for an unsecured card to improve credit score. However, the balance limit may be small and there may be a yearly fee.

Get the card, pay the annual fee, and you will see. For the next three to four months, charge small amounts using this card and then pay the balance off when your bill arrives. This will place another trade-line on your credit report score; this will show your entire balance payment each month. This can improve credit score by, again, as much as 40 points over a period of four to six months.

Analyze your credit report carefully. Look for any debt that is not yours and begin getting this debt off of the report. Errors and duplications usually happen when you share a name with a family member, or identity theft. Report this to the Big Three (Equifax in Atlanta, Georgia, Experian in Orange, California; and TransUnion in Chicago, Illinois) and follow the processes these bureaus outline for you.

However, before you consult with credit repair professionals and pay them, it would be a good idea to look for ways to enhance your score yourself. Following the above tips may bring your credit score to a very solid level.

Do not fret about having a low credit score because there are still a lot of things that can be done to improve it. With the help of 720creditafterbk.com, people can now fix credit scores fast!

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Author: David

Fair Debt Collection Practices Act requires that debt collectors treat you fairly and prohibits certain methods of debt collection. Of course, the law does not erase any legitimate debt you owe.

This answers commonly asked questions about your rights under the Fair Debt Collection Practices

What debts are covered?

Personal, family, and household debts are covered under the Act. This includes money owed for the purchase of an automobile, for medical care, or for charge accounts.

Who is a debt collector?

A debt collector is any person who regularly collects debts owed to others. This includes attorneys who collect debts on a regular basis.

How may a debt collector contact you?

A collector may contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts.

Can you stop a debt collector from contacting you?

You can stop a debt collector from contacting you by writing a letter to the collector telling them to stop. Once the collector receives your letter, they may not contact you again except to say there will be no further contact or to notify you that the debt collector or the creditor intends to take some specific action. Please note, however, that sending such a letter to a collector does not make the debt go away if you actually owe it. You could still be sued by the debt collector or your original creditor.

May a debt collector contact anyone else about your debt?

If you have an attorney, the debt collector must contact the attorney, rather than you. If you do not have an attorney, a collector may contact other people, but only to find out where you live, what your phone number is, and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases, the collector may not tell anyone other than you and your attorney that you owe money.

What must the debt collector tell you about the debt?

Within five days after you are first contacted, the collector must send you a written notice telling you the amount of money you owe; the name of the creditor to whom you owe the money; and what action to take if you believe you do not owe the money.

May a debt collector continue to contact you if you believe you do not owe money?

A collector may not contact you if, within 30 days after you receive the written notice, you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.

What types of debt collection practices are prohibited?

Harassment. Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, debt collectors may not:

• use threats of violence or harm;
• publish a list of consumers who refuse to pay their debts (except to a credit bureau); /li>
• use obscene or profane language; or repeatedly use the telephone to annoy someone.

False statements. Debt collectors may not use any false or misleading statements when collecting a debt. For example, debt collectors may not:

• falsely imply that they are attorneys or government representatives;
• falsely imply that you have committed a crime;
• falsely represent that they operate or work for a credit bureau;
• misrepresent the amount of your debt;
• indicate that papers being sent to you are legal forms when they are not; or
• indicate that papers being sent to you are not legal forms when they are.

Debt collectors also may not state that:

• you will be arrested if you do not pay your debt;
• they will seize, garnish, attach, or sell your property or wages, unless the collection agency or creditor intends to do so, and it is legal to do so; or
• actions, such as a lawsuit, will be taken against you, when such action legally may not be taken, or when they do not intend to take such action.

Debt collectors may not:

• give false credit information about you to anyone, including a credit bureau;
• send you anything that looks like an official document from a court or government agency when it is not; or
• use a false name.

Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, collectors may not:

• collect any amount greater than your debt, unless your state law permits such a charge;
• deposit a post-dated check prematurely;
• use deception to make you accept collect calls or pay for telegrams;
• take or threaten to take your property unless this can be done legally; or
• contact you by postcard.

What control do you have over payment of debts?

If you owe more than one debt, any payment you make must be applied to the debt you indicate. A debt collector may not apply a payment to any debt you believe yo u do not owe.

What can you do if you believe a debt collector violated the law?

You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, you may recover money for the damages you suffered plus an additional amount up to $1,000. Court costs and attorney' s fees also can be recovered. A group of people also may sue a debt collector and recover money for damages up to $500,000, or one percent of the collector' s net worth, whichever is less.

Where can you report a debt collector for an alleged violation?

Report any problems you have with a debt collector to your state Attorney General's office and the Federal Trade Commission. Many states have their own debt collection laws, and your Attorney General' s office can help you determine your rights.