What is Credit Counseling?
Credit counseling is a simple, but powerful way for those in debt to better manage their finances.
A credit counselor, someone who works at a credit counseling company, can be a great resource for analyzing your financial situation, and provide steps to better manage your debt.
People in debt can go to a credit counselor to become more financially literate, and hopefully gain the knowledge to choose the right steps in getting out of debt. However, be aware that while some credit counseling companies are in fact, non-profit and charge little to no fees for a consultation, some will often lead debtors to debt management companies, which comes with its own set of fees and requirements.
How Does it Work?
If you are interested in speaking with or meeting with a credit counselor, the FTC has made a great guide.
In general, look for credit counseling organizations that do not charge upfront fees, that are honest and reputable, and do not push you to join a debt management program, or charge simply for financial information.
Once you have settled on a credit counseling organization, you will usually meet or speak with a credit counselor who is certified and knowledgeable in financial planning, budgeting, and management. You will benefit by sharing your financial situation and debts honestly with your credit counselor as they will help you develop a budget and create a plan of attack for solving your financial problems.
Will It Affect My Credit?
Credit counseling will not have an impact on your credit score.
Asking for and receiving advice from a credit counselor is a good way to gain financial knowledge. However, if your counselor recommends a debt management program and you choose to enroll, this may reflect on your credit report.
work with a counselor one on one to become more financially literate.
Finding a knowledgeable credit counselor can help you build better spending and budgeting habits.
No effect on credit score.
non-profit doesn’t mean it’s free. Some non-profit credit counseling companies still charge fees for service
Some credit counselors will push debt management programs on you
you must do your research to find an accredited and respected credit counseling company