If you find yourself facing more debt than you can manage on your own, you might want to consider the assistance of a credit-counseling agency. Because these agencies handle some of your most sensitive personal information, you'll want to be sure that you're dealing with an efficient and reputable organization. After locating several credit counseling agencies through the Yellow Pages or via the Internet, you can assess their reputation by checking with your local Better Business Bureau.

Some credit counseling agencies are strictly non-profit and offer their services for free to those they deem in need of assistance. Others charge fees, ranging from an up-front deposit to a final bill, based on time spent consolidating your debts. You'll want to find out right away if you will eventually be charged for the services, as the last thing you need at this point is another bill. Once you've determined if you'll be able to work with the agency, you can start repairing your credit rating by letting the agency consolidate your debt.

Credit Card Counseling Agencies

Credit counseling agencies can help you draft a debt repayment plan, outlining what needs to be done in order to clear all of your outstanding balances. Your income, along with any unforeseen financial setbacks (such as medical expenses) are also taken into account when composing this plan. The outstanding debts are then converted into one sum, which you can then start to repay in monthly installments. In some cases, an agency might buy the debt from your creditors, meaning you make your monthly payments directly to the agency. In other cases, the agency might intervene on your behalf, convincing your creditors to extend grace periods, temporarily suspend collection, or accept a reduced lump sum.

Credit counselors can help you get out of debt, but they cannot totally erase any past damage to your credit report. Although past bad credit can remain on your report for several years, working with a credit counseling agency can still help you get approved for credit in the future. Through a credit counseling agency, you will be able to make consistent payments against your outstanding balance, which does reflect positively on your credit report, and can be influential if you apply for credit in the future.