Market Insider By Peter Tremblay 574 Views

Non-profit or For-Profit Credit Counselling Agency – What’s the Difference?

The journey of dealing with debt can be long and tough. Even though most people aren’t willing to talk about their credit, addressing the debt is inevitable if you want to get out of serious financial trouble. Credit repair agencies offer a service known as credit counseling. This involves having a one on one consultation with a person who understands how credit works and can help you improve your situation. These services are offered by non-profit as well as profit-making agencies. To help you determine where to seek credit counselling services, let’s look at the difference in what these agencies offer and how they operate.

How do for-profit agencies fund their activities?

The key difference between for-profit and non-profit credit counselling agencies is that when an agency is running non-profit, it’s key goal is not to make any money from its customers. Unlike their counterparts, for-profit credit counseling agencies are required to pay taxes, just like any other business. Their sole purpose is to provide services that generate revenue and grow the business. These for-profit credit counselling organizations receive their seed capital from partners, investors or individuals who are keen on building a business while helping people resolve their financial situations.

For-profit credit counselling agencies charge clients for all their services and in turn strive to deliver professional services in order to keep their business running. Reputable for-profit counseling agencies provide exceptional money management advise which may include budgeting, educational workshops, and resources that help consumers improve their financial situation. They have good counselors who are certified and experienced in debt management.

Who runs non-profit credit counseling agencies?

Non-profit credit counseling agencies are not owned by any individuals. They are created to provide expert advice and help consumers find better ways to manage their income and expenses while providing these services free of charge.  A common misconception is that all non-profit credit-counselling agencies are funded by creditors and therefore work in the best interest of the creditor and not the consumer. However, this is not the case for all not-for-profit agencies. There are some good credit repair agencies that don’t operate for profit but are really passionate about helping people in difficult financial situations. It’s important to do your research and know what you need before you commit. Do background checks and investigate other people’s experiences working with the agency. Ensure that the agency is dedicated to helping you reach your goals.

Do non-profit and for-profit credit counselling agencies offer similar services?

In some cases, for-profit credit counselling agencies offer a lot more services in order to fulfill varying client needs. These additional services will not only help consumers get out of debt but also stay debt-free. They may include debt consolidation, debt settlement, and bankruptcy assistance. There’s really no limit as to what type of services consumers can access in for-profit agencies. Their idea is to ensure their clients access a wide range of credit services under one roof.

Some non-profit credit counselling agencies offer specialized services in order to target a certain group of consumers. For instance, you may find a non-profit agency that offers bankruptcy advice or other forms of debt help. It’s always important to understand the range of services offered by the agency prior to signing up.

Benefits of non-profit credit counselling services

  • With a non-profit credit-counselling agency, you’re sure the organization doesn’t run with the sole intention of making money and hence they’ll have your best interests in mind.
  • Non-profit agencies that offer credit-counselling services are regulated. This helps to guarantee a high level of competence and integrity.
  • You get credit counseling done at no cost. They don’t take advantage of people who are already struggling with finances.
  • Non-profit counselors are required by law to review all your options. They should only recommend the best solution for your situation and not try to sell your program.

Cons of non-profit credit counselling

Credit counselling cannot help in all situations. If you are simply unable to cut your expenses and don’t have adequate income to make minimum payments, there’s only so much that a credit counsellor can do. Some financial situations cannot be improved without a change in mindset.

 What happens in credit counselling?

Credit counsellors can help you evaluate your debt and take measures to regain stability. They can review your budget and help you identify the best way to get out of a financial mess. They can also help you create a debt management program by coming up with a repayment plan that your creditors can agree to.

During the initial evaluation, the credit counsellor will ask for some basic information such as your income, current debt, monthly expenses and the current balances on your credit card. The counselor may also run a credit check (a soft inquiry that doesn’t affect your credit score) to better understand your financial situation. Once they have an accurate picture of your financial situation, the counsellor will recommend a suitable option for debt relief such as debt consolidation, debt settlement or a balance transfer.

Credit counseling can help you get an unbiased, expert opinion on how to become debt free. You also learn how to minimize credit damage and ask about your options for credit solutions. Remember, ignoring financial mistakes doesn’t make them go away. Getting help from experts who have assisted others in similar situations, is always important.

How to find proper credit counseling services

When comparing credit counsellors, ask for more information regarding the organization prior to sending details about your situation. Check the legitimacy of the credit-counseling agency online and keep an eye out for consumer complaints. Opt for an organization that offers a range of services such as budget counseling and debt management. If the agency charges a fee, get specific pricing for the set-up or monthly fees where applicable. Find out if the agency is licensed to provide debt management services in your area. Ensure the counselors are certified and trained in financial management services. Most importantly, find out how they can help you to avoid getting into future debt.



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