If you are having trouble paying your bills on time and are living paycheck to paycheck, you may benefit from going to a credit counselor to get your budget on track. Credit counselors are experts who work with you to develop a plan to tackle your financial troubles by helping you manage your money, develop a working budget and pay back your debt.

However, be forewarned. Many credit-counseling agencies that label themselves as nonprofit may be looking to exploit customers for their own bottom line. They may want you to buy services that will leave you worse off than before. So it’s important to do your homework and carefully shop around between different credit counseling agencies to find one that has your best interests in mind.

Be on your guard if a credit-counseling agency promises to clean up your credit for a fee or qualify you for a loan. These companies, sometimes called credit repair clinics, typically charge hefty, unnecessary fees for credit repair that you can perform on your own for free.

Almost all credit-counseling agencies offer a debt management plan (DMP). DMPs allow you to deposit a monthly payment to the agency, which the agency then uses to pay down your credit card debt, student loans and medical bills. The agency may also negotiate with these lenders to lower your interest rates and monthly payments.

Although debt management may be the right solution for you, be wary if the agency doesn’t offer other options. Some unscrupulous companies may try to pressure their customers into such a plan. Find out if the counselors are compensated for signing people up for DMPs – this is a red flag that the agency is not legitimate.

Fees for services should be straightforward and reasonable. Set-up or monthly fees should run $50 or less, and monthly fees should be cheaper – in the $25 range. And if you are in a state of financial hardship, they should be willing to waive all fees. Steer clear of any organization that takes “voluntary” contributions or charges fees upfront before they provide any services.

If the agency refuses to send you information about its services without first getting your personal information, find another one. Same advice goes if the agency has a minimum debt requirement.

You can also check with your local Better Business Bureau to see any complaints filed against your agency. And check if the agency is affiliated with a national body such as the National Foundation for Credit Counseling (NFCC), which holds strict ethical and quality standards for membership.

If you are struggling to climb out of debt, it may be worth giving a credit-counseling agency a try. Working with credible credit counseling agencies, including the National Federation for Credit Counseling and Financial Planners Association, can bring you one step closer to rebuilding your economic security.

Dedrick Asante- Muhammad is the senior director of the NAACP Economic Programs. To learn more about preventing foreclosure and personal finance, check out the NAACP Financial Freedom Center Facebook Page or on Twitter @naacpecon.

The opinions expressed here do not necessarily reflect those of BET Networks. 

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