Dave Says: How Can Credit Counseling Companies be Non-Profit?

Dear Dave,

I was wondering about these credit counseling companies. How can they claim to be non-profit when they charge for their services and make so much money off people? Are they worth using at all?

- Terry

Dear Terry,

All non-profit means is that they don’t make a profit. They can spend any extra money they make on advertising, salaries and other stuff to retain this status. Being listed as a non-profit also makes them more attractive to credit card companies than for-profit counseling services, because the credit shark can take a deduction for donating to such “charitable” organizations.

There are two good reasons why consumers shouldn’t use these non-profit, credit counseling services. One is that YOU need to learn how to handle your own money, and they don’t teach you that. Number two, if you use one of these services, you’ll be treated according to Fannie Mae underwriting guidelines as if you’d filed a bankruptcy!

Here’s the deal, Terry. Personal finance is 80 percent behavior and only 20 percent math. If you don’t learn how to change your behavior, your money will always control YOU instead of YOU controlling your money. But here’s the good news. Once you get control, you free up the largest wealth-building tool you have – your income.

- Dave