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How Do I Know If a Credit Counseling Agency Is Legitimate?

A legitimate credit counseling agency is usually a nonprofit offering services like credit counseling, housing counseling, and bankruptcy counseling. Its counselors should hold certifications from an independent third party. If you need bankruptcy counseling, check that the agency is approved by the U.S. Department of Justice. The law also requires agencies to protect your personal information.

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Approval by the U.S. Department of Justice Executive Office of United States Trustees does not endorse or assure the quality of our services.

What Makes a Credit Counseling Agency Legitimate#

Cambridge Credit Counseling is a 501(c)(3) nonprofit agency that offers credit counseling, housing counseling, reverse mortgage counseling, and bankruptcy counseling. It also provides debt management plans, student loan counseling, and first-time homebuyer education courses. Cambridge Credit Counseling was established in 1996 and has provided credit counseling and financial literacy education to consumers nationwide since then.

Look for Independent Certification#

At Cambridge Credit Counseling, professional counselors are certified through an independent third party rather than the agency itself. Counselors hold credentials such as NFCC Certified Credit Counselor, HUD-Certified Housing Counselor, HUD-Approved Reverse Mortgage Counselor, and PFE Certified Debt Management Professional. Cambridge Credit Counseling’s counselors are certified through the National Foundation for Credit Counseling, and many staff members are also certified through the Partnership for Financial Education. The agency’s professional counselors average over 14 years of experience helping people work on their finances.

Bankruptcy Counseling Needs Special Government Approval#

Not every credit counseling agency can legally offer bankruptcy counseling. Only agencies approved by the U.S. Department of Justice Executive Office for United States Trustees can provide this service. Cambridge Credit Counseling is approved by this office to administer both the pre-filing credit counseling course and the post-filing debtor education course, and both are available online. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, people planning to file for bankruptcy must, with limited exceptions, complete credit counseling within 180 days before filing and complete a debtor education course for their debts to be discharged.

Types of Counseling and Their Approvals#

Counseling services and the approvals behind them
Counseling TypeApproval or Certification
Credit CounselingCounselors certified through the National Foundation for Credit Counseling (NFCC)
Housing CounselingAgency approved by the U.S. Department of Housing and Urban Development (HUD)
Reverse Mortgage CounselingHUD-approved counselors; third-party counseling required under Home Equity Conversion Mortgage (HECM) rules
Bankruptcy CounselingAgency approved by the U.S. Department of Justice Executive Office for United States Trustees

Housing and Reverse Mortgage Approvals Matter Too#

Cambridge Credit Counseling is approved by the U.S. Department of Housing and Urban Development to provide housing counseling services nationwide, including first-time homebuyer courses. Cambridge Credit Counseling provides foreclosure intervention and default counseling to residents of Massachusetts, Connecticut, New York, Missouri and Kansas. Cambridge Credit Counseling is also approved by HUD and the Massachusetts Executive Office of Elder Affairs as a reverse mortgage counseling agency. Home Equity Conversion Mortgage rules require that reverse mortgage borrowers receive counseling from a third party.

Your Personal Information Should Stay Private#

A legitimate credit counseling agency cannot legally release your personal information without your consent. This protection matters because agencies like Cambridge Credit Counseling collect nonpublic personal information from applications, including your name, address, Social Security number, account numbers, balances, and details about creditors and unsecured loans.

Talk to Different Credit Counseling Agencies Before Choosing One#

Don’t just select the first agency you find. Make sure it’s a good fit for you. Contact different agencies to gain a clear idea of the kind of services they offer. Here are some questions to ask while you’re shopping around for the right agency:

  • What services do you offer? You want to be sure you’re signing up for a program with the least amount of risk to you. For example, debt settlement is completely different than a debt management plan, and debt settlement could have adverse effects on your credit.
  • Do you charge anything for your services? Even though an agency is a nonprofit, there will almost always be minimal fees involved with managing your credit card debt. It’s always a good idea to discuss this with your counselor to be sure you aren’t paying more than you should.
  • Do you offer financial educational materials? Financial education should be the backbone of any debt counseling experience. It should include, at a minimum, an in-depth workbook or guide to educate you on the basics of financial management.
  • Can you provide references? References give you a real look at how people feel about their experience with the agency. Search for the agency’s name and “reviews.” One example of a consumer review site is TrustPilot, which provides consumer reviews of the agency and shows the agency’s overall rating compared to other consumer credit counseling agencies.
  • For how long has your agency been providing these services? An agency’s experience with managing consumer debts usually translates to the experience of its counselors. Check the agency’s website, usually in the About Us section.
  • Do you offer all terms and conditions of the contract in the form of a written agreement? Although there can be state-specific requirements, your service agreement should include, at a minimum, the responsibilities of both parties, an explanation of all fees, a general outline of the services to be provided, a cancellation policy, a refund policy, and a privacy policy. Read the service agreement carefully and ask questions about anything you don’t understand.
  • What will my new interest rates be? Interest rates vary from creditor to creditor. Once you participate in a debt analysis, your counselor should be able to give you an idea of what the interest rate reductions will be, but until a creditor accepts a proposal from a credit counseling agency, there is no definitive answer.
  • After solving my immediate problem, will you also help me avoid such situations in the future? This should be the ultimate goal of every consumer credit counseling agency, which is why financial education is so important.

Carry Out Thorough Research#

  • Look for agencies that offer financial education for free. A reputable agency will offer assistance through free financial educational material to help you manage financial issues in the future.
  • Check complaint records. Once you’ve narrowed your list of agencies down to a few you would want to use, check each one out with your state Attorney General, local consumer protection agency, and Better Business Bureau (BBB). They can tell you whether consumers have registered a complaint against any of the agencies. If there are complaints filed against an agency, or if it has not responded to the complaints, consider it a red flag.
  • Ask friends and family. Contact people you know who’ve dealt with financial problems in the past and are now debt-free. Ask them whether they can recommend an agency, and ask for their feedback on the agencies you’ve selected.
  • Call the references. Contact the references and ask what worked and didn’t work for them. The more detailed questions you ask, the better your chances are of finding the right credit counseling agency for you.
  • Compare services and costs. Compare the services and costs quoted by each agency. The most common services include assisting you in managing your finances and debt, helping put together a viable family budget and working with you to stick to it, and offering free resources on managing money and workshops. Choose the agency that offers the best deal and matches your requirements.

What To Do Next#

Before you sign up with any agency, ask about its nonprofit status, its counselors’ certifications, and whether it holds the government approvals needed for the specific service you want, such as bankruptcy counseling from the U.S. Department of Justice or housing and reverse mortgage counseling from HUD. If you want to learn more about reverse mortgage counseling options through Cambridge Credit Counseling, you can call (800) 757-1788 to schedule an appointment.

Common questions

What certifications should a credit counseling agency's counselors have?

Reputable agencies use counselors certified through an independent third party. At Cambridge Credit Counseling, counselors hold certifications such as NFCC Certified Credit Counselor, HUD-Certified Housing Counselor, HUD-Approved Reverse Mortgage Counselor, and PFE Certified Debt Management Professional.

Can any credit counseling agency provide bankruptcy counseling?

No. Only agencies approved by the U.S. Department of Justice Executive Office for United States Trustees can legally provide bankruptcy counseling services. Cambridge Credit Counseling holds this approval and offers both the pre-filing and post-filing courses online.

Is my personal information safe with a credit counseling agency?

It is illegal for a credit counseling agency to release your personal information without your consent. Agencies such as Cambridge Credit Counseling collect information like your name, address, Social Security number, and account details only as part of providing counseling services.

What other services might a legitimate nonprofit credit counseling agency offer?

Besides credit counseling, a nonprofit agency like Cambridge Credit Counseling may offer housing counseling, reverse mortgage counseling, student loan counseling, debt management plans, and first-time homebuyer education courses.

How experienced are the counselors at an established agency?

At Cambridge Credit Counseling, professional counselors are certified through an independent third party and average more than 14 years of experience helping people work on their finances.

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