Credit counseling companies come in all shapes and sizes. Whether you are looking at working with a local credit counseling organization or a national credit counseling organization there are some very important factors to calculate before choosing the right credit counseling option for you. Here is a list of questions for you to ask a credit counseling company before determining whether or not you should participate with their organization.

Licensing Requirements-

Credit counseling organizations are held to certain standards by state regulatory officials. Credit counseling organizations are required to adhere to state licensing requirements. It is important that you ask the credit counseling organization if they are compliant and able to offer credit counseling services in your area. Keep in mind though, that although a majority of states have requirements for credit counseling organizations not all do. You may want to check your particular states finance and banking department if you have questions regarding the status of the credit counseling organization you are speaking with.

Credit Counselor, or Not?-

Credit counseling has been around for years. However, recently credit repair or debt settlement companies have sprouted up everywhere. Credit counseling has a proven record of working for consumers. Recently credit counseling organizations have come under fire from the press and IRS due to a few bad seeds. These companies were not credit counseling to its truest form. Credit counseling was created with the consumer in mind, some companies failed to recognize that.

Along with the credit counseling industry in a little turmoil over the bad seeds more and more credit repair companies making false claims came along. Credit counseling took a hit for that although the two practices are entirely different. Then you have debt settlement. Debt settlement companies claim they will have your debt paid off in a short time. It would be nice if they were paying it all back, but they are not. You also get extremely past due and your credit can be ruined for a long time. Sometimes these companies call themselves credit counselors. Credit counseling is for the best interest of the consumer. Make sure to ask the organization you are speaking to if they are a credit counseling organization. Ask if they have certified credit counselors staffed.

Non-Profit-

Credit counseling organizations typically hold a 501c3 status with the IRS. This means that the credit counseling organization carries a non profit status with the IRS. Credit counseling organizations that utilize the non profit status are held to higher standards by the IRS. There are caps on the fees they can charge and it is expected that the credit counseling organization is designed to educate the public about debt. Not all non profit credit counseling organizations use the non profit status for the best of the client. Check with the credit counseling company you are thinking of working with and ask them if they are a licensed non profit credit counseling organization. Then ask them what they do to earn that status. If a counselor can not tell you it may be an indicator to look for another credit counseling organization to work with.

Rick Munster is the Media Planner for Debt Reduction Services, http://www.debtreductionservices.com. When he's not busy developing a media plan he enjoys writing or getting away to mountains for a little fishing and hiking.