by: Michael Saunders

Don't be fooled by the come-ons. According to the Federal Trade Commission - you see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims:

* Credit problems? No problem!

* We can erase your bad credit - 100% guaranteed.

* Create a new credit identity - legally.

* We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!

Do yourself a favor and save some money, too. Don't believe these promises. Only time, a conscious effort, and a personal debt repayment plan will improve your credit report.

Make sure that you ask the right questions BEFORE you engage a credit counselor.

The fact that there are so many bad credit counseling companies out there shouldn't make you avoid them entirely if you could benefit from legitimate help. If you're already behind on your bills, unable to make minimum payments, borrowing from one card to pay another, or otherwise demonstrating signs of extreme financial distress, credit counseling might be preferable to bankruptcy.

Credit counseling is not a good option if you're current on your bills and able to pay more than the minimums. Credit counseling itself won't hurt your credit score, but the reactions of some of your lenders might. In short, you need to tread carefully. Here are some of the things you need to consider before signing up with a credit counselor:

1. Is it accredited? You'll want a counselor affiliated with the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies. You can find affiliated agencies.

2. What do regulators say about it? At a minimum, make two calls: one to your local Better Business Bureau and one to your state attorney general's office. Ask how many complaints have been made about the agency and see if any regulatory actions are pending against them.

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Did you know?  (continued...)
Before Engaging a Credit Counseling Service Ask These Questions
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