Best Credit Counseling: How to Find Quality Services
Addressing debt is not something that many people look forward to doing. When faced with deciding between continuing to struggle to pay your creditors and placing trust in an organization to deliver on their promises of debt relief, it can be difficult to make a move with surety. Credit counseling in most cases offers a risk-free, trustworthy way to receive personalized financial advice. The best credit counseling can identify multiple solutions for your situation and goals and empower you to make forward progress.
What Is Credit Counseling and What Is Its Purpose?
Credit counseling is a free service offered through nonprofit agencies whose core mission is create access to financial education. Not indicated by its name, credit counseling can include assessing income compared to spending, identifying and clarifying past debt history as well as other instances of borrowing, and formulating ideas for general financial improvement.
The purpose of credit counseling is to understand a client’s debt and credit related goals and their ability to achieve those goals on their own. Should the client need additional resources or support, a credit counselor is able to discuss the pitfalls or benefits of each.
The best credit counseling serves as more than just a one-time financial fix. Its holistic approach seeks to address the cause of burdens and build self-sufficiency within the household being counseled. Nonprofits that provide credit counseling, such as Money Fit, are passionate about arming their clients with the know-how to lead a life free from debt and other financial worries. Working alongside their clients, they ensure a future filled with hope.
When Should You Consider Credit Counseling?
Many debt or credit issues can be resolved in a do-it-yourself fashion. These circumstances may include:
Negotiating a repayment plan with creditors
Paying off a thousand dollars or less in debt
Arranging debt consolidation through a personal loan or balance transfer card
Repairing poor credit over time
Those who feel stuck living paycheck to paycheck and face ballooning credit or loan balances, collection attempts, burdensome medical debt or on the brink of bankruptcy only stand to benefit from meeting with a credit counselor to discuss options.
No matter how large or small your debt is, if you are feeling overwhelmed, you can find guidance, clarity, and peace through credit counseling services. Seeking help may be especially beneficial if you find yourself in one of the following situations:
You have over $1,000 in one or more forms of unsecured debt
Your monthly payments are becoming unaffordable
You are stressed from being contacted by collection agencies
Late fees and increasing interest have resulted in insurmountable balances
You struggle to break your dependency on credit
A poor credit score has impacted your financial opportunities
What Services Do the Best Credit Counseling Agencies Offer?
If you schedule an appointment for credit counseling, you can expect to spend much of your time detailing your debt, the factors that contributed to it, and the options you have to make debt repayment more comfortable.
If it is reasonably difficult to manage your debt on your own, your counselor may offer information on the benefits of enrolling in a nonprofit debt management program. This is a form of structured repayment that leads consumers through repaying their creditors in full while saving money in interest and fees. The time spent in debt is also significantly reduced.
If you are looking for financial guidance beyond debt, many credit counseling agencies strive to offer other resources including the following:
During this session, your credit counselor will review your income and spending. They will help you find ways to cut expenses in order to eliminate your reliance on credit and free up money to pay current debt. If your debt is under control, your counselor may suggest strategies for building short and long-term savings.
Credit Report Analysis
Whether debt has impacted your credit for the worse, or you are just looking to tune up your score for future borrowing, a credit report analysis can help. During this consultation, your credit counselor will review your report for errors, discuss how much each instance of borrowing has affected your credit profile, and suggest ways lenders might want to see you improve (i.e. reducing utilization or seeking credit diversity).
If you have suffered an extreme hardship such as extended unemployment, health problems, or divorce or loss of spouse, your options to rehabilitate your finances may be limited. Credit counseling can be the first step in determining if you should file for bankruptcy. If you decide this is best, you will need to complete two sessions of bankruptcy counseling. Your counselor will be able to detail what to expect from the law offices handling your case, what fees and paperwork will be required, and possible ways to avoid filing for bankruptcy in the future.
What Should You Look for in a Credit Counseling Agency to Ensure Its Not a Scam?
Today, there are many services that offer help with debt. Unfortunately, not all should be immediately trusted. How can you tell between a company that’s looking out for themselves and one that is looking out for you? Be sure to ponder the following questions:
Is This Company a For-profit or a Nonprofit?
For-profit business are often more concerned with making money off their clients than nonprofits who are generally founded on the principle of assisting their communities.
Additionally, nonprofits are audited regularly to ensure they are meeting a stricter set of standards and regulations.
What Kind of Accreditation(s) Has This Company Achieved?
All credit counseling companies should have a positive Better Business Bureau rating as well as be ISO (International Organization for Standardization) certified.
To be sure an organization is permitted to practice credit counseling, verify that they are accredited by a regulatory entity such as the Financial Counseling Association of America (FCAA) or National Foundation for Credit Counseling (NFCC).
**Money Fit works on a yearly basis to maintain its membership in the FCAA.
How Long Has This Company Been in Business?
Companies that have been around for over a decade or two have undergone federal review and have proven they operate ethically. In order to surpass competitors that pop-up over night, they build upon long histories of positive customer experiences.
Does This Company Believe in Transparency?
When you browse their website do you get a clear idea of what to expect? You should know what kind of agreement you are making and what they promise in return. When you speak with them on the phone, the credit counselor shouldn't hesitate to disclose all fees involved and who they are being paid to as well as other debt relief options you might consider.
Are the Credit Counseling Fees Justifiable?
The best credit counseling agencies will provide consultations for free. Should you choose to enroll in a debt management program, there are some fees to expect including an enrollment fee and a monthly fee for maintenance purposes.
A credit counseling organization will never charge abhorrent fees. If more than 15% (not to exceed $75) of your monthly payment is being pocketed, you should consider this a red flag.
Are They Customer-centric?
As you navigate your way to healthier finances, you may prefer constant support. Look for a company that shows you patience and compassion, stays in touch regularly, and goes the extra mile to meet your requests. A higher quality credit counseling program likely offers personal finance resources to nurture your complete financial wellness as well.
In summary, you should always feel they have your best interest in mind.
How Can Credit Counseling Help You?
If you feel stuck between a hard place and a rock and you don’t know what to do about your debt, credit counseling can offer a listening ear and a helping hand. You’ll be given the opportunity to unload your stress and voice the concerns you’ve previously battled alone.
Your credit counselor will then be able to clarify your options and assist you in building a plan for financial freedom. Once you’ve completed your consultation, you can feel relieved knowing that you now have an advocate to stand between you and your creditors.
If you choose to enroll in a debt management program, your credit counselor will work to reduce your interest rates, have late fees dropped, and put an end to collection attempts.
In the case that credit counseling cannot help your situation, consulting with a credit counselor can still inform you on other ways to lift your financial burden.
How to Get Started
Getting started is as easy as reaching out. You can do this through a short form on our site or by giving us a call.
No matter where you are at, we are ready to help and answer any remaining questions you may have.
Prior to a credit counseling appointment, you may want gather information regarding who and what you owe for a faster, smoother process. Your credit counselor will be there to guide you the rest of the way.