Get your 3 credit score before a counselor
Dear Action Line: I need to improve my credit score to qualify for a home loan, and I’m told I should go through credit counseling for this. How do I find a legitimate credit counseling agency? — S.P., Tulsa.
Fair Isaac Corp., inventor and owner of the “FICO credit score” (used by 90 percent of U.S. banks in making loan decisions) says on its Web site that the last thing a financially struggling consumer needs is to be stung or misled by an unscrupulous credit counseling agency. Some are in it just for the money — not for you.
Certification: The quickest way to find a legitimate agency is through the National Foundation for Credit Counseling. It educates and certifies each member as a Certified Consumer Credit Counselor. It requires strict quality, financial and ethical standards of its members, annual audits by independent CPA firms and written action plans to be provided to each client with quarterly statements. NFCC certification means counselors have passed a rigorous battery of tests measuring their financial knowledge.
Accreditation: The agency should also be accredited by an independent third party — “self-accreditation” is not what you want. A reputable third party accrediting body is the Council on Accreditation — at tulsaworld.com/CouncilAccred . Such accreditation signifies that appropriate checks and balances are in place to protect consumers from being victimized by excessive fees or even fraud.
Tax status: The agency should be a 501(c)(3) “nonprofit community organization.” Being a nonprofit doesn’t guarantee it is legitimate, but this status is a good sign.
Board of directors: Board members should not be paid nor be family members or friends of the president but should represent a wide cross section of community and civic interests.
Services offered: The agency should offer a wide range of services, including budget counseling for those who are not in debt; debt counseling for those who may need professional assistance digging out; and housing counseling for pre-rental, pre-purchase, first-time homebuyer, reverse mortgage and foreclosure prevention. It must also offer court-mandated bankruptcy pre-filing counseling and pre-discharge education.
Fees: Details on service fees charged by the agency should be available to callers. No fee should be assessed prior to provision of services. Beware of agencies that say their fees are “voluntary” — you get what you pay for. Any set-up fee or monthly fee should be reasonable: $50 or less for set-up and around $25 monthly. The agency should be willing to waive all fees for true economic hardship.
Counseling method: Does the agency offer in-person counseling, counseling by phone or Internet counseling? Does it provide educational classes or workshops, and is there a fee to attend? Are any of these tools offered online? The absence of any true education offered to the general public is a red flag. See more NFCC advice at tulsaworld.com/NFCCguidelines .
Source: Tulsa World
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