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How a Credit Counseling Agency's Model Can Affect Your Cardmembers

The best and least expensive forms of marketing for almost any organization are referral and word of mouth. When you’re working with cardmembers who are overdue for payments or delinquent on their accounts, it can be frustrating – but it shouldn’t change your strategy to build a good relationship with them. The way you work with cardmembers who are in poor standing speaks louder than how you work with those in good standing.


People want to know how you’ll treat them when times are tough. That’s why the credit counseling service you choose for your cardmembers is so important. In fact, a credit counseling agency’s model can affect your cardmembers in ways you may not expect. Below are the two most common types of models and what you can expect from them.




For-Profit Debt Relief Model


You should be wary of many for-profit debt relief organizations. Just like any other for-profit business, their main goal is to make money. They may not always put your organization or cardmember’s needs first, instead opting to create a debt relief plan that makes them the most money.


One of the most important services that non-profit credit counseling offers is education: a service that nearly all for-profit models neglect. Without the educational component, your cardmembers are likely to accrue too much debt again, creating a dangerous cycle.

Additionally, these companies may charge your cardmembers very steep fees and cannot guarantee good results. Working with these companies often doesn’t assure positive results for lenders, either. They have a high rate of charge-offs, which costs you money and creates a negative event in your cardmember’s credit history.


Non-Profit Credit Counseling and Debt Management Plan DMP Model


Ideally, you’ll want to refer your cardmembers to non-profit credit counselors. Their goal is to help your cardmembers pay off their debt with as little fallout as possible. Because of their non-profit status, they can hold both your organization and your card member’s best interests in mind. You can be assured of positive intent because as an agency, they represent your customer and what is best for helping them.


The first thing that they will always recommend is a budget reconsideration to help your cardmember avoid negative hits to their credit score. They don’t want to see your cardmember get a charge-off, which benefits both your organization as well as your cardmember.


Ultimately, what a credit counselor does is give your cardmember the tools they need to be a better customer while helping them create a more balanced financial life and increasing their credit score.


When a cardmember’s debt to income ratio is too high for a simple budget reorganization, non-profit credit counselors work with both the lender and cardmember to create a debt management plan (DMP). A DMP saves your organization and your cardmember from dealing with charge-offs and bankruptcy.


How a Credit Counseling Agency (CCA) Management Company Can Help Your Cardmembers


Finding reputable credit counseling agencies takes time, effort, and personnel. While quality credit counseling is an important reflection on your organization’s reputation, it isn’t profitable and can easily become just another thing to check off a growing to-do list. Credit counseling agency management companies take the burden off you while helping you maintain a strong reputation with your cardmembers.


At Peregrin, we only work with full-service non-profit credit counseling agencies that can provide your cardmembers with what they need to set their finances back in order. Have questions for us? Give us a call at 443-394-0073 or contact us on the website to get information personalized to how you can manage credit counseling to reflect well on your organization.

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