What Can Credit Counseling Do For You?
Nonprofit credit counseling organizations provide free financial assistance to anybody, regardless of their financial status. If you’ve just lost your job and are having trouble figuring out your budget or want to look into debt repayment alternatives, they may be able to assist you.
While you may be able to find a nonprofit credit counselor near you, many organizations provide nationwide assistance over the phone or online. Nonprofit credit counseling organizations provide a wide range of services, such as general financial guidance, homeownership counseling, and more. Some services are completely free.
Here’s a rundown of what’s available, as well as how to choose an agency and get started.
Credit counseling services are offered through credit counseling organizations.
The following are the five major services provided by credit counseling agencies:
- General budgeting: A free first consultation, usually lasting an hour, examines your financial situation, including your income, expenditures, and financial objectives. After this session, you and the counselor may determine that you would benefit from further therapy, such as debt counseling or credit management.
- Debt management plan: A counselor develops a plan to combine your consumer bills and reduce your credit card interest rate by setting up a single monthly payment to pay off the debt over three to five years.
- Bankruptcy counseling is a two-part financial education program before you file for bankruptcy and again before your debts are erased.
- Student loan counseling: Options for repayment are explored, and a counselor may help you communicate with your loan servicers.
- Housing counseling: Whether you’re having difficulty paying your rent or are a first-time homebuyer, there are a number of counseling alternatives available to help you better understand and manage your housing costs.
While credit counseling organizations generally provide many, if not all, of these services, their debt management programs are their most well-known. Debt management programs are a less extreme option for debt relief than bankruptcy or debt settlement.
Furthermore, numerous organizations provide educational courses and materials online, which are often free.
What to Look For When Choosing a Credit Counseling Firm
The first step in engaging with a credit counseling organization is to locate one that you are interested in working with. Consider:
- Accreditation and certification: Verifying that the agency you’re dealing with is accredited and certified is an intelligent method to ensure a trustworthy organization. Any for-profit business claiming to be a credit counseling organization should be avoided.
The National Foundation for Credit Counseling and the Financial Counseling Association of America is part of the nonprofit sector. Both of these organizations have certification standards to guarantee that counselors have a consistent level of education and quality. They also need accreditation, in which an external authority verifies that practice requirements are being fulfilled.
- Access: When selecting a credit counseling organization, consider how you like to receive services: over the phone, in person, or online. Despite the fact that many organizations are certified in all 50 states, the majority exclusively provide in-person therapy in a few places.
- Cost: The cost of services varies depending on the agency, the state, and the individual’s financial situation. Before you sign up for a service, make sure you know how much you’ll have to pay each month, so you know how much it’ll cost you in total.
Remember that nonprofit credit counselors are not the same as for-profit credit repair businesses, which frequently provide services that you may do yourself.
Debt settlement, which is promoted as a fast cure but is not a viable choice for most individuals, is also distinct from credit counseling programs.
Starting at the beginning
Before contacting a credit counseling service, take a few minutes to collect information about your circumstances. The first meeting will cover everything in your budget, from a mortgage to movie tickets, so the more information you provide, the better.
Take a look around. In comparison, you may attempt the free first session at several agencies. You’ll almost certainly have a long-term connection with the one you select, so be sure you can afford the fees and are comfortable dealing with its representatives.